ECON 200 Handout 3 Key Terms Flashcards
Consumption (C)
All expenditure by the household sector
Household Sector
The part of nation that includes families
Business Sector
The part of the nation that includes businesses
Government Purchases (G)
The expenditures by the government, that does not include its transfer payments
Transfer Payments
Government distributions of money such as social security payments
International Sector
A country’s exports (X) and imports (M)
Net Exports
X-M
Net Factor Payments
The payments received by the domestic owners of foreign-situated assets for those assets’ services, minus the payments to the foreign owners of assets that have delivered services domestically
Investment (I)
The net increase in existing assets distinguished by the assets’ location: the creation of new assets within the borders of a country constitutes investment for that country, regardless of which country’s savings finance it
Closed Economy
An economy that operates independently of any other economy
Savings Schedule
Schedule that illustrates a positive relationship between r and Sd (Desired Saving)
Investment Schedule
Schedule that illustrates a negative relationship between r and Id
World Interest Rate (rw)
Interest rate for the entire world
Open Economy
An economy that trades with other economies
Current Account (CA)
The sum of net exports of goods and services (NX) and the net exports of asset services (NFP)
