ECO 1102 Lecture Notes - Lecture 14: Open Economy, The International (Golf)

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ECO 1102 Full Course Notes
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ECO 1102 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 e(cid:454)ports (cid:894)or trade (cid:271)ala(cid:374)(cid:272)e(cid:895): the (cid:448)alue of a (cid:374)atio(cid:374)"s e(cid:454)ports (cid:373)i(cid:374)us the (cid:448)alue of its i(cid:373)ports. 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. The flow of financial resources: net capital outflow. Net capital outflow: the purchase of foreign assets by domestic residents minus the purchase of domestic assets by foreigners. Some of the variables that influence net capital outflow (nco): Real interest rates being paid on foreign assets. Real interest rates being paid on domestic assets. Perceived economic and political risks of holding assets abroad.

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