CHEMENG 2G03 Study Guide - Final Guide: Bank Reserves, Pessimism, Openmarket
4 Mar 2014
School
Department
Course
Professor
Document Summary
Chapter 12 open economy macroeconomics: trade is beneficial due to absolute advantage. *closed economy country doesn"t interact with other countries. *open economy country does interact with other countries. Imports, exports, exchange rate: we can sell goods/ services in world product markets or stocks/ bonds financial market. *exports produced domestically sold abroad, *imports produced abroad sold to us: #net exports = exports imports, also called *trade balance. **#current account balance = net exports + net inflow of dividends and interest payments: #y c g = i + nx, S = i + nx or s= i + Nco: @in closed economy nco/ nx = 0, so s = i, trade deficit: s < i, nx < 0, y < c + i + g, opposite for surplus. **nominal exchange rate rate which person can trade currency of one country with another. *appreciation money can buy more foreign currency, opposite for depreciation.
