ECO 1102 Chapter Notes - Chapter 12: Tim Hortons, Open Economy, Real Interest Rate
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ECO 1102 Full Course Notes
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Chapter 12 - the macroeconomics of open economies. 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 sold abroad. Imports - goods and services that are produced abroad and sold domestically. Net exports - the value of nation"s exports minus the value of its imports, its also called the trade balance. Net exports = value of country"s exports - value of country"s imports. Trade balance - the value of a nation"s exports minus the value of its imports; also called net exports. Trade surplus - an excess of exports over imports. Trade deficit - an excess of imports over exports. Balanced trade - a situation in which exports equal imports. There are many variables that can cause trade surplus or deficit.