march 22 lecture notes

march 22 lecture notes - THE REST OF THE BOOK TAKES Place...

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THE REST OF THE BOOK TAKES Place in Mexico, foreign savings is foreigner’s savings in Mexico, not Mexico saving abroad Introduction o International trade refers to the exchange of merchandise and services among countries of the world o International finance refers to the exchange of assets among the countries of the world Global exchange of assets in the world economy has at times been nearly 100 times check slides Circular Flow o Production process of the firm generates income that accrues to the Household Income (y) consists of wages, salaries, and payments for the use of property assets Given the simple assumption of this chapter, (y) is also equal to both the nominal gross national product (GNP) and the nominal gross domestic product (GDP) of Mexico GDP is the market value of all final goods and services produced within a country in a given time GNP the market value of all final goods and services produced by permanent residents of a nation within a given period of time Consumption process of the household generates consumption expenditures that accrue to the firm (c) When you open the circular flow chart (open economy) we see government, rest of the world, and capital, see figure 12.2 in textbook 3 types of savings: Households, governments firms Open-Economy Accounts o The rest of the world interacts with the Mexican economy – foreigners’ account in Mexico’s Books Makes an expenditure in the form of its purchases of Mexico exports (E)
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