This course covers the theory of international trade and some real-life applications. The starting point is an introduction to international trade and related disciplines, including international finance and foreign direct investment (topic 1). This is followed by a discussion of the role of international trade in the economy, including the is-lm-bp model and open economy macroeconomics (topic 2). The theories of absolute and comparative advantage are examined and some exact rules are suggested for identifying comparative and absolute advantage using the basic concept of production possibility frontier. Two models of comparative advantage are examined, the ricardan and heckscher–ohlin models (topics 3, 4 and 5). Intra-industry trade and the new theory of international trade are covered in topic 6. Two practical applications are presented to explain flaws in some trade policies and to demonstrate that (i) reducing imports does not boost economic growth (a policy proposal from donald trump), and (ii) revaluation of the yuan is unlikely to reduce the us trade deficit with china.