What is international economics?

International economics deals with the economic interdependence among nations. It analyzes the flow of goods, services, and payments between a nation and the rest of the world, the policies directed at regulating this flow and their effect on the nation's welfare. This economic interdependence among nations is affected by, and in turn influences, the political, social, cultural and military relations among nations. Specifically, international economics deals with the pure theory of trade, the theory of commercial policy, foreign exchange markets and the balance of payments and adjustment in the balance of payments. The pure theory of trade analyzes the basis for and the gains from trade. The theory of commercial policy or protectionism examines the reasons for and the effects of trade restrictions. Foreign exchange markets are the framework for the exchange of one national currency for another while the balance of payments measures a nation's total receipts and the total payments to the rest of the world. Finally, adjustment in the balance of payments disequilibria under international monetary systems and the effects of these adjustments on a nation's welfare.