ECON102 Chapter Notes - Chapter 12: Exchange Rate, Trade-Weighted Effective Exchange Rate Index, Capital Outflow
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Trade allows people to produce what they produce best and to consume the great variety of goods and services produced around the world. 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. The flow of goods: exports, imports, and net exports. Exports: goods and services that are produced domestically and abroad. Imports: goods and services that are produced abroad and sold domestically. Net exports/trade balance: the values of a nation"s exports minus the value of its imports. Net exports = value of country"s exports value of country"s imports. Tells us whether the country is a seller or buyer in the world markets for goods and services. Positive/trade surplus: exports > imports the country sells more goods and services abroad than it buys from other countries.
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Q46. An appreciation of the U. S. dollar would a. encourage foreigners to invest in the United States b. discourage foreigners from buying U. S. goods c. discourage the travel abroad of U. S. citizens d. encourage foreign travel in the United States Q47. The financial account of the balance of payments includes the purchase and sale of physical assets but not of financial assets. a. true b. false Q48. Special Drawing Rights are issued by the a. International Monetary Fund b. Bretton Woods Organization c. General Agreement on Tariffs and Trade d. World Bank Q49. The balance of payments includes a. only exports, imports, and service transactions b. the balance on current account, plus all capital transactions and all official transactions and the statistical discrepancy c. only the official transactions d. all goods and services produced in a nation's economy during a given year Q50. A debit item on the U. S. balance of payments is any transaction that a. results in a loss by U. S. sellers b. results in a loss by U. S. buyers c. makes foreigners use up their holdings of U. S. dollars d. makes U. S. dollars available to foreigners |