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19 Cards in this Set
- Front
- Back
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Trade Policy |
A government policy that directly influences the quantity of goods and services that a country imports or exports |
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Capital Flight |
A large and sudden reduction in the demand for assets located in a country |
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Market for loanable funds |
coordinates the economy's saving , investment , and flow of loanable funds abroad |
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Foreign currency exchange |
coordinates people who want to exchange the domestic currency for the currency of other countries |
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Market for Loanable funds formula |
saving(s)= domestic investment(i)+netcapital |
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When NCO>0 |
Country is experiencing a net outflow of capital and net purchase of capital overseas add ot the demand for domestically generated loanable funds |
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NCO<0 |
Country is experiencing a net inflow of capital . and the capital resources coming from abroad reduce the demand for domestically generated loanable funds |
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NCO<0 |
country is experiencing a net inflow of capital |
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Higher real interest rate |
encourages people to save and therefore raises the quantity of loanable funds supplied and also discourages investment and reduces the quantity of loanable funds demanded |
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Foreign currency exchange |
NCO=NX |
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Trade surplus NX>0 |
foreigners are buying more us goods and services than americans are buying foreign goods and services |
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NCO>0 |
Americans must be buying foreign assets so us capital is flowing abroad |
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Trade deficit (NX<0) |
Americans are spending more on foreign goods and services than they are earning from selling abroad |
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NCO<0 |
selling american assets abroad so foreign capital is flowing into the united states |
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in the market for loanable funds net capital outflow is |
demand! |
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in the foreign currency exchange net capital is |
the supply! |
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When us interest rate is high owning us assets is more attractive and us net capital outflow is low (true/false) |
True! |
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Tariff |
Tax on imported goods |
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Import Quota |
Limit on the quantity of a good produced abroad that can be sold domistically |
