Unit 6 Flashcards

1
Q

balance of payments

A

summary of a nation’s international trade. It is made up of current account (CA) and capital and financial account (CFA)

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2
Q

What is current account made up of (3)

A

-trade (net exports)
-investment income
-net transfers

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3
Q

investment income

A

money earned by doing business elsewhere

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3
Q

what are net transfers?

A

money flowing from one country to another

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4
Q

capital and financial account (CFA)

A

measures the purchase and sale of financial assets abroad

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5
Q

foreign direct investment

A

foreign companies buy businesses abroad

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6
Q

net capital outflow

A

difference between the purchase of foreign assets and domestic assets

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7
Q
A
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8
Q

Capital Stock

A

Item that can produce more goods

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9
Q

Stagflation

A

Both inflation and unemployment are rising

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10
Q

Supply shock

A

Event that suddenly increases/decreases the supply of a good or service

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11
Q

Autonomous consumption

A

Expedientares consumers make even when their disposable income is 0

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12
Q

Crowding out

A

Increased interest rates causes a reduction in investment spending

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13
Q

Velocity of money

A

Rate at which money is exchanged in an economy

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14
Q

Demand deposits

A

Funds held in an account that can be withdrawn at any time

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15
Q

Excess reserves

A

Money held by a bank beyond what is required by the reserve requirement

16
Q

Federal funds rate

A

Interest rate banks charge other banks

17
Q

Leakages

A

Capital/income that escapes an economy in terms of the circular flow

18
Q

Fiat money

A

Medium that serves as currency but has no other intrigaron value

19
Q

Foreign direct investment

A

Purchase of an asset in another country

20
Q

Infrastructure

A

Structure within an economy that facilitates the economic activity of bridges, roads, railroads,etc

21
Q

Opportunity cost

A

Loss of potential gain from alternatives when one choice is made

22
Q

Trade offs

A

What you give up in a choice

23
Q

Nominal gdp

A

GDP not adjusted for inflation

24
Real GDP
Adjusted for inflation
25
Nominal interest rate
The actual interest rate paid
26
Real interest rate
Rate adjusted for inflation (includes just the expected inflation)
27
Labor force
All members of a population that are able to work
28
Inflation rate
Rate of increase of prices in a given period of time
29
CPI
A measure of the average change in price of a good over time
30
Equilibrium
AD Equals AS
31
Exchange rate
Price of one currency relative to another currency
32
FOREX Shifters
-change in tastes -change in relative income -change in relative price level -change in relative interest rates
33
What do the following phrases indicate -silver per gold -silver price in gold -value of gold per silver
Exchange rate