Term
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Definition
| Occurs when many depositors withdraw cash from their accounts all at once |
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Term
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Definition
| A system of exchange in which peopele directly trade one good for another, without using money as an intermediate step. |
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Term
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Definition
| the standard object used in exchanging goods and services. It is the medium of exchange |
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Term
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Definition
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Term
| If European economies experience a strong economic recovery: |
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Definition
| U.S. net exports will increase and AD will shift outward. |
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Term
| When the dollar appreciates, the cost of foreign goods for Americans: |
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Definition
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Term
| For a major country with capital flows, what is the effect of an decrease in interest rates? |
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Definition
| A currency depreciation and increased net exports. |
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Term
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Definition
| Honda purchases parts from a Korean company to manufacture the automobile in the U.S. |
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Term
| The sequence of events following a contractionary monetary policy would be higher interest rates followed by: |
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Definition
| dollar appreciation, lower exports, higher imports. |
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Term
| International capital flows in an open economy have the effect of: |
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Definition
| reducing the power of fiscal policy and increasing the power of monetary policy |
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Term
| The trade deficit is the mirror image of the required capital inflows. So why worry about these capital inflows? |
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Definition
| These capital inflows create debts on which interest and principal payments will have to be made in the future. |
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Term
| How does a budget deficit lead to a trade deficit? |
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Definition
| The budget deficit leads to higher interest rates and exchange rates, which shrink net exports. |
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Term
| What would be a cure for the U.S. trade deficit? |
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Definition
| A severe recession in the United States. |
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Term
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Definition
| is one that does not trade with other nations in either goods or assets. |
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Term
| international capital flows |
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Definition
| are purchases and sales of financial assets across national borders. |
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Term
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Definition
| is one that trades with other nations in goods and services, and perhaps also trades in financial assets |
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Term
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Definition
| the excess of its imports over its exports. If, instead, exports exceed imports, the country has a trade surplus. |
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Term
| Increase in net exports (X-IM) |
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Definition
-Increase X; Decrease IM
-Multiplier effect on economy
-Aggregate demand - shifts outward-right
- Increase real GDP
- Increase price level |
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