B A 370 Chapter Notes - Chapter 8: Gross Domestic Product, Gross National Income, Purchasing Power Parity
Document Summary
Globalization - processes by which goods, services, capital, people, information, and ideas flow across national borders. Trade deficit - country imports more good than it exports. Can signal the potential for greater competition at home from foreign producers. Trade surplus - higher level of exports than imports. Firms would prefer to manufacture in a country that has this because it signals a greater opportunity to export products or more markets. Gross domestic product (gdp) - market value of the goods and services produced by a country in a year. Gross national income (gni) - consists of gdp plus the net income earned from investments abroad (minus any payments made to non residents who contribute tot he domestic economy. Purchasing power parity (ppp) - theory that states that if the exchange rates of two countries are in equilibrium, a product purchased in one will cost the same in the other, if expressed in the same currency.
