ECON 202 Chapter Notes - Chapter 13: Real Interest Rate, Japanese Currency, Capital Outflow
2 Oct 2018
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Document Summary
Trade allows people to produce what they produce best and to consume the great variety of goods and services produced around the world. Can raise living standards in all countries by allowing each country to specialize in the goods and services in which it has a comparative advantage. For most of macroeconomics, international issues are peripheral. Macroeconomists encounter issues when studying an open economy, an economy that interacts freely with other economies around the world. An open economy interacts with other economies in two ways. Buying and selling goods and services in world product markets. Buying and selling capital assets such as stocks and bonds in world financial markets. The flow of goods: exports, imports, and net exports. Exports are domestically produced goods and services that are sold abroad. Imports are foreign-produced goods and services sold domestically. The net exports of any country are the difference between the value of its exports and the value of its imports.
