Advertisement Upgrade to remove ads

Closed Economy

An economy that does not interact with other economies in the world

Open Economy

An economy that interacts freely with other economies around the world

Exports

Goods and services that are produced domestically and sold abroad

Imports

Goods and services that are produced abroad and sold domestically

Net Exports

The value of a nation's exports minus the v alue of its imports; also called the trade balance

Trade balance

The value of a nation's exports minus the value of its imports; also called net exports

Trade surplus

An excess of exports over imports

Trade deficit

an excess of imports over exports

Balanced trade

A situation in which exports equal imports

Net capital outflow

The purchase of foreign assets by domestic residents minus the purchase of domestic assets by foreigners

NCO=NX

The international flow of goods and services and the international flow of capital are two sides of the same coin; Because every international transaction involves an exchange of an asset for a good or service....

NX>0

Nation selling more goods and services to foreigners than it is buying from them(NCO>0)

NX<0

Nation is buying more goods and services from foreigners that it is selling to them(NCO<0)

Nominal exchange rate

the rate at which a person can trade the currency of one country for the currency of another

Appreciation

An increase in the value of a currency as measured by the amount of foreign currency it can buy

Depreciation

A decrease in the value of a currency as measured by the amount of foreign currency it can buy

Real exchange rate

The rate at which a person can trade the goods and services of one country for the goods and services of another

Purchasing-power parity

A theory of exchange rates whereby a unit of any given currency should be able to buy the same quantity of goods in all countries

Please allow access to your computer’s microphone to use Voice Recording.

Having trouble? Click here for help.

We can’t access your microphone!

Click the icon above to update your browser permissions above and try again

Example:

Reload the page to try again!

Reload

Press Cmd-0 to reset your zoom

Press Ctrl-0 to reset your zoom

It looks like your browser might be zoomed in or out. Your browser needs to be zoomed to a normal size to record audio.

Please upgrade Flash or install Chrome
to use Voice Recording.

For more help, see our troubleshooting page.

Your microphone is muted

For help fixing this issue, see this FAQ.

Star this term

You can study starred terms together

NEW! Voice Recording

Create Set