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20 Cards in this Set
- Front
- Back
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An increase in the value of a currency as measured by the amount of foreign currency it can buy.
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appreciation
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A situation in which exports equal imports.
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balanced trade
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An economy that does not interact with other economies in the world.
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closed economy
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A decrease in the value of a currency as measured by the amount of foreign currency it can buy.
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depreciation
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Goods produced domestically and sold abroad
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exports
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Goods produced abroad and sold domestically
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imports
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The purchase of foreign assets by domestic residents minus purchase of domestic assets by foreigners.
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net capital outflow
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Spending on domestically produced goods by foreigners (exports) minus spending on foreign goods by domestic residents (imports).
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net exports
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The rate at which a person can trade the currency of one country for the currency of another.
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nominal exchange rate
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An economy that interacts freely with other economies around the world
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open economy
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A theory of exchange rates whereby a unit of any given currency should be able to buy the same quantity of goods in all countries.
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purchasing-power parity
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The rate at which a person can trade the goods and services of one country for the goods and services of another.
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real exchange rate
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The value of a nation's exports minus the value of its imports; also called net exports.
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trade balance
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An excess of imports over exports.
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trade deficit
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An excess of exports over imports.
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trade surplus
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the maximum sustainability output, given the supply of resources, technology, and production incentives; the output level when there are no surprises about the price level.
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Potential output
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the unemployment rate when the economy produces its potential output.
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Natural rate of unemployment
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in macroeconomics, a period during which some resource prices, especially those of labor, are fixed by explicit or implicit agreements.
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Short run
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An increase in government purchases, decrease in net taxes, or some combination of the two aimed at increasing aggregate demand enough to return the economy to its potential output thereby reducing unemployment; policy used to close a contractionary gap.
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Expansionary fiscal policy
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A decrease in government purchases, increase in net taxes, or some combination of the two aimed at reducing aggregate demand enough to return the economy to potential output without worsening inflation; policy used to close an expansionary gap.
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Contractionary fiscal policy
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