Term
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Definition
| an economy that does not interact with other economies in the world |
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Term
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Definition
| an economy that interacts freely with other economies around the world |
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Term
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Definition
| goods and services that are produced domestically and sold abroad |
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Term
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Definition
| goods and services that are produced abroad and sold domestically |
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Term
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Definition
| the value of a nation's exports minus the value of its imports; also called the trade balance |
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Term
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Definition
| the value of a nation's exports minus the value of its imports; also called net exports |
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Term
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Definition
| an excess of exports over imports |
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Term
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Definition
| an excess of imports over exports |
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Term
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Definition
| a situation in which exports equal imports |
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Term
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Definition
| the purchase of foreign assets by domestic residents minus the purchase of domestic assets by foreigners, Net capital outflow = net exports |
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Term
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Definition
| the rate at which a person can trade the currency of one country for the currency of another |
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Term
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Definition
| the increase in the value of a currency as measured by the amount of foreign currency it can buy |
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Term
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Definition
| a decrease in the value of a currency as measured by the amount of foreign currency it can buy |
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Term
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Definition
| the rate at which a person can trade the goods and services of one country for the goods and services of another |
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Term
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Definition
| a theory of exchange rates whereby a unit of any given currency should ber able to buy the same quantity of goods in all countries |
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Term
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Definition
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Term
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Definition
| the value of money in terms of the quantity of goods it can buy |
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Term
| What happens when central bank prints large quantities of money? |
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Definition
| that money loses value both in terms of the goods and services it can buy and in terms of the amount of other currencies it can buy |
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Term
| according to theory of purchasing-power parity |
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Definition
| the nominal exchange rate between the currencies of two countries must reflect the price levels in those countries |
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Term
| if purchasing power of dollar is always same at home and abroad |
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Definition
| the real exchange rate cannot change |
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