ECONOMICS 1B
LEARNING UNIT 4
THE FOREIGN SECTOR
COMPREHENSIVE MASTER STUDY GUIDE · VISUAL EDITION
Combined using ONLY the two uploaded LU4 sources. Extra source diagrams
and visuals have been added throughout so the concepts and graph movements
are easier to study.
SOURCE RULE
This version still uses only the two uploaded LU4 sources. The added visuals are source diagrams/images from the
PPTX and PDF themselves; no outside diagrams have been introduced.
PMAC5112 · Economics 1B · LU4 Foreign Sector · Visual Edition Page 1
, CONTENTS
01 The Foreign Sector: Big Picture
02 Why Countries Trade
03 Absolute Advantage
04 Comparative Advantage
05 Absolute vs Comparative Advantage
06 Trade Policy & Barriers to Trade
07 Tariffs, Quotas, Subsidies & Non-Tariff Barriers
08 Exchange Rates
09 The Foreign Exchange (Forex) Market
10 Demand for US Dollars
11 Supply of US Dollars
12 Equilibrium in the Forex Market
13 Changes in Demand & Supply: Graph Logic
14 Impact of Rand Appreciation / Depreciation
15 Managed Floating Exchange Rate Policy
16 Managed Floating: Graph You Must Know
17 Speculation in the Forex Market
18 Terms of Trade
PMAC5112 · Economics 1B · LU4 Foreign Sector · Visual Edition Page 2
, 01 The Foreign Sector: Big Picture
Globalisation
Globalisation is the increasing connection between countries through trade, investment, technology, tourism and
communication.
Open economy
An open economy is one that trades with other countries. The South African economy may be described as an open
economy.
Key terms to know
The second source specifically tells you to understand: Globalisation / Open Economy; self-sufficiency / autarky;
GATT, IMF and World Bank. The supplied material names these terms but does not give full definitions for all of them,
so this guide does not add outside definitions.
Upload 1 — slide 4: globalisation and open-economy overview.
PMAC5112 · Economics 1B · LU4 Foreign Sector · Visual Edition Page 3
, Upload 1 — slide 5: South Africa as an open economy.
PMAC5112 · Economics 1B · LU4 Foreign Sector · Visual Edition Page 4
LEARNING UNIT 4
THE FOREIGN SECTOR
COMPREHENSIVE MASTER STUDY GUIDE · VISUAL EDITION
Combined using ONLY the two uploaded LU4 sources. Extra source diagrams
and visuals have been added throughout so the concepts and graph movements
are easier to study.
SOURCE RULE
This version still uses only the two uploaded LU4 sources. The added visuals are source diagrams/images from the
PPTX and PDF themselves; no outside diagrams have been introduced.
PMAC5112 · Economics 1B · LU4 Foreign Sector · Visual Edition Page 1
, CONTENTS
01 The Foreign Sector: Big Picture
02 Why Countries Trade
03 Absolute Advantage
04 Comparative Advantage
05 Absolute vs Comparative Advantage
06 Trade Policy & Barriers to Trade
07 Tariffs, Quotas, Subsidies & Non-Tariff Barriers
08 Exchange Rates
09 The Foreign Exchange (Forex) Market
10 Demand for US Dollars
11 Supply of US Dollars
12 Equilibrium in the Forex Market
13 Changes in Demand & Supply: Graph Logic
14 Impact of Rand Appreciation / Depreciation
15 Managed Floating Exchange Rate Policy
16 Managed Floating: Graph You Must Know
17 Speculation in the Forex Market
18 Terms of Trade
PMAC5112 · Economics 1B · LU4 Foreign Sector · Visual Edition Page 2
, 01 The Foreign Sector: Big Picture
Globalisation
Globalisation is the increasing connection between countries through trade, investment, technology, tourism and
communication.
Open economy
An open economy is one that trades with other countries. The South African economy may be described as an open
economy.
Key terms to know
The second source specifically tells you to understand: Globalisation / Open Economy; self-sufficiency / autarky;
GATT, IMF and World Bank. The supplied material names these terms but does not give full definitions for all of them,
so this guide does not add outside definitions.
Upload 1 — slide 4: globalisation and open-economy overview.
PMAC5112 · Economics 1B · LU4 Foreign Sector · Visual Edition Page 3
, Upload 1 — slide 5: South Africa as an open economy.
PMAC5112 · Economics 1B · LU4 Foreign Sector · Visual Edition Page 4
