Real and Monetary Side of International Economics

The discipline of international economics is composed of two main parts: International trade and international money. International trade refers to the real side of international economics while international money refers to the monetary side of international economics. The analysis on international trade part takes the real transactions into consideration , leaving the money aside. In other words, international trade analysis is based on the physical movement of goods or services. In this respect, we can conjure up a simple system of barter. On the other hand, the international money part deals with the financial transactions like foreign exchange, foreign exchange markets, foreign exchange rate systems, payments among the nations, investment flows, and balance of payments.