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15 Cards in this Set
- Front
- Back
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Closed Economy is one that... |
that does not interact with other economies in the world |
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Open Economy is one that... |
an economy that interacts freely with other economies around the world |
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Exports |
The goods and services that a country sells to foreign nations |
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Imports |
The goods and services that a country purchases to be consumed domestically |
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Net Exports |
(NX) = Exports - Imports |
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Trade Balance |
The value of the Net Exports (NX) |
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Trade Surplus |
When # of exports is greater than imports |
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Trade Deficit |
When # of imports is greater than exports |
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Balanced Trade |
a situation where exports = imports |
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Net Capital Outflow (NCO) |
The purchase of Foreign assets by domestic residents - the purchase of domestic assets by foreigners |
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Nominal Exchange Rate = |
the rate at which a person can trade the currency of one for the country for the currency of another. |
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Appreciation . . . |
an increase in the value of a currency as measured by the amount of foreign currency it can buy |
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Depreciation . . . |
a decrease in the value of a currency as measured by the amount of foreign currency it can buy |
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Real Exchange Rate = |
The rate at which a person can trade the goods and services of 1 country for the goods and services of another country. |
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Purchasing Power Parity |
= 1 = eP/P* |
