What is a set of ideas about the world economy and how it works?

Answer 1

If someone could explain the international economy satisfactorily in a WikiAnswer, there should be no reason why the international economy is faltering right now.

There are some fundamentals, however, that are worth mentioning (along with numerous others):

Supply and Demand: People will pay a price commensurate with their desire of the good and the quantity sold. Sellers will only provide a good if they can make a profit through its sale. These two forces create price and quantity.

Ricardian Equivalence Theory and Hecksher-Olin: These two theories come together and basically explain that every region has a different set of relative costs depending on whether that region has a surplus of capital, labor, or technology. On account of this, even poor states might have a relative advantage in some form of production and can thus be part of the international trading community.

Economic North and South: The world does not trade evenly with itself. Industrialized countries such as Anglo-America, Europe, Israel, Japan, Australia, and New Zealand, and powerhouses such as China and India perform the overwhelming of world trade and they trade with each other. Since most industrialized countries are in the Northern hemisphere, this is called the Economic North. Latin America, Africa, most South and Central Asia, and the Pacific Islands are relatively cut off from trade. This means that those economies have significantly less potential to grow and develop.

Speculation and Fear: As concerns investing, hope, and reasonability in fluctuating markets, what something (either a noticeable trend or information) is believed to represent is a much more serious indicator of what people are going to do than the actual thing itself. For example, if oil is discovered on a piece of land, that land will become desirable to multiple investors who may each value the land in excess of how much oil it is known to have (since it could have more that we just do not know about yet) and will compete price-wise on these higher excessive values. The exact opposite (people being scared to invest) because of meager showings also occurs.

Overprinting of Money leads to Inflation, but the lack of sufficient money and mechanisms for cycling it through the population leads to stagnation.

World Trade Organization: The WTO is designed to set the rules by which trade must occur between countries, polices tariffs and non-tariff barriers to trade, and has a system of courts and sanctions for violators of its fair-trade policies. Note that fair-trade means trade that is done legally, not trade for goods produced at a living wage.

International Finance: Even countries may need to have loans if they are spending more than they are taking in. Understandably, organizations like International Monetary Fund, which gives loans to struggling countries, are not well-regarded since the hamstring the spending of the funds given.