Lec12handout

Lec12handout - Open-Economy Macroeconomics Basic Concepts Slide#12 August 2 2010 International Flows of Goods Capital Closed economy Does not

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Open-Economy Macroeconomics: Basic Concepts Slide #12 August 2 2010
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Closed economy Does not interact with other economies in the world Open economy Interacts freely with other economies around the world 2 Intro Macro
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Flow of goods: exports, imports,& net exports Exports Produced domestically Sold abroad Imports Goods and services Produced abroad Sold domestically 3 Intro Macro
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Flow of goods: exports, imports,& net exports Net exports Value of a nation’s exports Minus the value of its imports Also called trade balance Trade balance Value of a nation’s exports Minus the value of its imports Also called net exports 4 Intro Macro
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Flow of goods: exports, imports,& net exports Trade surplus Excess of exports over imports Trade deficit Excess of imports over exports Balanced trade Exports equal imports 5 Intro Macro
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Factors - influence a country’s exports, imports, and net exports: Prices of goods at home and abroad Exchange rates People use domestic currency to buy foreign currencies Incomes of consumers at home and abroad Cost of transporting goods from country to country Government policies toward international trade Intro Macro 6
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Flow of financial resources: net capital outflow Net capital outflow Purchase of foreign assets by domestic residents Foreign direct investment Foreign portfolio investment Minus the purchase of domestic assets by foreigners Intro Macro 9
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Variables that influence net capital outflow
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This document was uploaded on 10/28/2011 for the course 220 103 at Rutgers.

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Lec12handout - Open-Economy Macroeconomics Basic Concepts Slide#12 August 2 2010 International Flows of Goods Capital Closed economy Does not

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