Principles of Economics- Mankiw (5th) 635

Principles of Economics- Mankiw (5th) 635 - buys stock in...

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IN THIS CHAPTER YOU WILL . . . Learn the meaning of the nominal exchange rate and the real exchange rate Examine purchasing- power parity as a theory of how exchange rates are determined Consider why net exports must always equal net foreign investment Learn how net exports measure the international flow of goods and services Learn how net foreign investment measures the international flow of capital See how saving, domestic investment, and net foreign investment are related When you decide to buy a car, you may compare the latest models offered by Ford and Toyota. When you take your next vacation, you may consider spending it on a beach in Florida or in Mexico. When you start saving for your retirement, you may choose between a mutual fund that buys stock in U.S. companies and one that
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Unformatted text preview: buys stock in foreign companies. In all of these cases, you are participating not just in the U.S. economy but in economies around the world. There are clear benefits to being open to international trade: Trade allows peo-ple to produce what they produce best and to consume the great variety of goods and services produced around the world. Indeed, one of the Ten Principles of Eco-nomics highlighted in Chapter 1 is that trade can make everyone better off. Chap-ters 3 and 9 examined the gains from trade more fully. We learned that international trade can raise living standards in all countries by allowing each O P E N - E C O N O M Y M A C R O E C O N O M I C S : B A S I C C O N C E P T S 657...
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This note was uploaded on 07/30/2010 for the course ECON 120 taught by Professor Abijian during the Spring '10 term at Mesa CC.

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