Definitions Flashcards
appreciation
increase in the value of an asset (e.g. currency, real estate)
depreciation
decrease in the value of an asset (e.g. currency, real estate)
exchange rate
the value of one currency in another currency
foreign direct investment (FDI)
refers to the investment made by a company or individual from one country in another country
dumping
when a country exports products at a price lower than the production market value of the country of origin
quotas
restrictions set by the government on the quantity of imported goods
subsidy
financial aid provided by the government to domestic firms in order for them to be able to compete with foreign products
tariffs
when government imposes tax on imported goods
balance of payments (BOP)
record of all economic transactions between the resident of the country and resident of all other countries
current account
sum of trade balance, balance of income and balnce of current transfers (exported & imported goods, donation/aid/gift, rent, wage, interest)
capital account
composed inflows minus outflow of capital transfer & transactions in non-produced, non-financial assets (e.g. land, water, patent, copyright)
financial account
inflow minus outflow of funds for direct investment and portfolio investment
trade balance/BOT
inflow and outflow of all visible and invisible exports and imports
trade war
refers to a conflict between two or more countries due to each country imposing trade barriers on the other country’s exports (which can lead to major retaliations)
consumption
spending on goods and services by individuals or households