Chapter 31 - Open-Economy Macroeconomics: Basic Concepts

Vocabulary
Closed Economy Open Economy Exports Imports Net Exports Trade Balance Trade Surplus Trade Deficit Balanced Trade Net Capital Outflow (NCO) Nominal Exchange Rate Appreciation Depreciation Real Exchange Rate Purchasing-Power Parity
 * Definition: An economy that does not interact with other economies in the world.
 * What It Means:
 * Definition: An economy that interacts freely with other economies around the world.
 * What It Means:
 * Definition: Goods and services that are produced domestically and sold abroad.
 * What It Means:
 * Definition: Goods and services that are produced abroad and sold domestically.
 * What It Means:
 * Definition: The value of a nation's exports minus the value of its imports; also called the trade balance. 
 * What It Means:
 * Definition: The value of a nation's exports minus the value of its imports; also called net exports.
 * What It Means:
 * Definition: An excess of exports over imports.
 * What It Means:
 * Definition: An excess of imports over exports.
 * What It Means:
 * Definition: A situation in which exports equal imports.
 * What It Means:
 * Definition: The purchase of foreign assets by domestic residents minus the purchase of domestic assets by foreigners.
 * What It Means:
 * Definition: The rate at which a person can trade the currency of one country for the currency of another.
 * What It Means:
 * Definition: An increase in the value of a currency as measured by the amount of foreign currency it can buy.
 * What It Means:
 * Definition: A decrease in the value of a currency as measured by the amount of foreign currency it can buy.
 * What It Means:
 * Definition: The rate at which a person can trade the goods and services of one country for the goods and services of another.
 * What It Means:
 * Definition: A theory of exchange rates whereby a unit of any given currency should be able to buy the same quantity of goods in all countries.
 * What It Means: