december1stnotes - 13:06 Closedvs.openeconomies

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13:06 Closed vs. open economies A closed does not interact with other economies in the world An open economy interacts freely with other economies around the  world.  Exports: Domestically produced goods and services sold abroad Imports: foreign produced goods and services Variables that Influence Net Exports consumers preferences for foreign and domestic goods price of goods at home and abroad  incomes of consumers at home and abroad the exchange rates at which foreign currency trades for domestic currency transportation costs government policies NX measures the imbalance in a country’s trade in goods and services. Trade deficit: an excess of imports over exports Trade surplus: an excess of exports over imports Balanced trade when exports = imports (more of a theoretical idea) The Flow of Capital
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december1stnotes - 13:06 Closedvs.openeconomies

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