Open Market operations Flashcards

1
Q

how do countries interact with eachother?

A

through exports, imports and investments

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2
Q

what are exports and imports?

A

exports are produced domestically and sold abroad

imports are produced abroad and sold domestically

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3
Q

What are trade deficits and surpluses?

A

trade deficit: when imports > exports

trade surplus: when exports > imports

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4
Q

What is Net capital outflow?

A

NCO = net capital outflow - net capital inflow

NCO = NX

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5
Q

2 types of foreign investment

A
  1. direct investment - canadian business’s are run abroad and invest in another country
  2. foreign portfolio investment - investments in your country are funded by foreign countries
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6
Q

What is the Balance of payment made up of?

A

current account + capital account + changes in international reserves

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7
Q

where does the demand for loanable funds come from?

A

domestic investors + forign investers. NCO + I

when foreign investment increases, GDP for host country increases, the return rate for foreign country increases

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8
Q

where does the supply for loanable funds come from?

A

comes from savers that provide deposits

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9
Q
A
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