ECON 1BB3 Lecture Notes - Lecture 12: Capital Outflow, Interest Rate Parity, Real Interest Rate
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ECON 1BB3 Full Course Notes
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Closed economy: an economy that does not interact with other economies in the world. Open economy: an economy that interacts freely with other economies around the world. Exports: goods and services that are produced domestically and sold abroad. Imports: goods and services that are produced abroad and sold domestically. Net exports: the value of a nation"s exports minus the value of its imports; also called the trade balance. Trade balance: the value of a nation"s exports minus the value of its imports; also called the net exports. Trade surplus: an excess of exports over imports. Trade deficit: an excess of trade imports over exports. Balanced trade: a situation in which exports equal imports. Net capital outflow: the purchase of foreign assets by domestic residents minus the purchase of domestic assets by foreigners. Nominal exchange rate: the rate at which a person can trade the currency of one country for the currency of another.