Unit 6 Flashcards
What are Net Exports? (Xn)
Exports-Imports
Define Trade Surplus
Exporting more than what is imported (+ Xn)
Define Trade Deficit
Exporting less than is imported. (-Xn)
Define Balance of Payments (BOP)
Summary of a country’s international trade; the balance of payments is made up of two accounts. The current account and the financial account.
Balance of Trade includes only goods and services but balance of payments considers _____ international transactions.
ALL
What 3 parts is the Current Account consisted of?
Trade in Goods and Services-Investment Income- Net Transfers TIN
Define Trades in Goods and Services
Difference between nation’s exports of goods and services and its imports of goods and services.
Define Investment Income
Income from the factors of production including payments made to foreign investors.
Define Net Transfers
Money flows from the private or public sectors.
The _____ measures the purchase and sale of financial assets abroad.
Financial Account
What is an example of Financial Account?
An American buys a Japanese government bond.
Define Foreign Direct Investment
When a foreign company buys a business in another country.
Define Net Capital Outflow
The difference between the purchase of foreign assets and domestic assets purchased by foreigners.
When is there a Financial Account Surplus?
Inflow>Outflow
When is there a Financial Account Deficit
Inflow
