Term
| NCO (Net Capital Outflow) |
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Definition
Foreign assets purchased by Canadians - Domestic assets purchased by foreigners.
Found in the MARKET FOR LOANABLE FUNDS.
NCO = NX
NCO is the Supply Curve on Foreign Currency Exchange (FCE) graphs. |
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Term
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Definition
| The amount of money a country saves is equal to the domestic investment and the NCO (NCO has to do with foreign, I with domestic). |
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Term
| Change in world interest rate |
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Definition
Causes NCO to change on LFM (loanable funds market) graphs, which means it shifts on FCEM (foreign currency exchange market) graps.
Increase in World interest rate crowds out domestic investment, causes dollar to depreciate, and causes net exports to rise. |
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Term
| Government budget deficits and surpluses |
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Definition
Shifts supply in MLF, which changes the Supply in FCEM.
Budget deficit causes dollar to depreciate and NX to rise. |
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Term
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Definition
| Import quotas increase the demand for dollars. |
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Term
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Definition
| Large and sudden reduction in demand for assets in a country. |
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