Chapter 6: The Open Economy Flashcards
1
Q
Net Exports
A
Exports minus imports
2
Q
Trade Balance
A
Another name for net exports. It tells us how our trade in goods and services departs from equal imports and exports
3
Q
Net Capital Outflow
A
Savings minus investments
4
Q
Trade Surplus
A
If S - I and NX are positive
5
Q
Trade Deficit
A
If S - I and NX are negative
6
Q
Balanced Trade
A
If S - I and NX are equal to 0
7
Q
Small Open Economy
A
A country that participates in world trade, but is not big enough to alter world prices
8
Q
World Interest Rate
A
The real interest rate prevailing
9
Q
Nominal Exchange Rate
A
The relative price of the currencies of two countries
10
Q
Real Exchange Rate
A
The relative price of the goods of two countries
11
Q
Purchasing-Power Parity
A
The law of one price applied to the international marketplace
