Economics 10b Chapter 32: Chapter 32 Notes

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Past three decades= us imports more than exports (negative net exports) Unfair competition: foreign firms are allowed to sell their products in us markets, while foreign governments impede us firms from selling us products abroad. Supply and demand for loanable funds and for foreign-currency exchange two markets: Market for loanable funds (coordinates the economy"s saving, investment, and flow of loanable funds abroad -- nco) Market for foreign-currency exchange (coordinates people who want to exchange the domestic currency for the currency of other countries) Savings = domestic investment + net capital outflow. Whenever a nation saves a dollar of its income, it can use that dollar to finance the purchase of domestic capital or to finance the purchase of an asset abroad. Savings = supply, investment and nco = demand loanable funds should be interpreted as the domestically generated flow of resources available for capital accumulation.

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