ECON 2 Chapter Notes - Chapter 31: Foreign Portfolio Investment, Loanable Funds, Autarky
Document Summary
Open economy macroeconomics: basic concepts (chapter 31: introduction. Will introduce basic concepts of international macroeconomics. The trade balance (trade deficits / surpluses) Closed economy : does not interact with other economies in the world. Open economy : interacts freely with other economies around the world. Exports : domestically produced goods & services sold abroad. Imports : foreign produced goods & services sold domestically. Net exports (nx) = a. k. a. the trade balance. = (value of exports) - (value of imports) Consumers" preference for foreign and domestic goods. Prices of goods at home & abroad. Incomes of consumers at home & abroad. The exchange rates at which foreign currency trades for domestic currency. Government policies: trade surpluses & deficits. Nx measures the imbalance in a country"s trade in goods & services. U. s. economy"s trade deficit is increasing with time. Flow of capital abroad takes 2 forms. Foreign direct investment : domestic residents actively manage the foreign.
