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15 Cards in this Set
- Front
- Back
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Balance of Trade |
The gap, if any, between a nation's exports and imports. |
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Exports |
Goods and services that are produced domestically and sold in another country. |
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Imports |
Goods and services that are produced abroad and sold domestically. |
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Trade Surplus |
When exports exceed imports. |
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Trade Deficit |
When imports exceed exports. |
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Merchandise Trade Balance |
The balance of trade looking only at goods. |
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Current Account Balance |
A broad measure of the balance of trade that includes trade in goods and services, as well as international flows of income and foreign aid. |
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National Saving and Investment Identity |
For any country, the quantity of financial capital supplied at any given time by savings must equal the quantity of financial capital demanded for purposes of making investments. |
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National Saving and Investment Identity factors: |
Supply of financial capital= Demand for financial capital: S+(M-X) = I+(G-T), or (M-X)=I-S-(T-G), or (X-M)=S+(G-T)-I S= Private Savings M=Imports X=Exports I=Private Sector Investment G= Government Spending T=Taxes |
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Q: Recession's affect on Trade Balance? |
A: Increase (Higher surplus, lower deficit) |
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Q: Boom's affect on Trade Balance? |
A: Decrease (lower surplus, larger deficit) |
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Q: Surplus and Deficit good or bad for economy? What determines whether good or bad? |
A: Can be good or bad. Wether or not the corresponding flows of financial capital are wisely invested. |
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Q: Which countries have higher levels of trade? |
A: 1: Small economies (trade outside their boarders to meet consumer needs) 2: Countries with many nearby trading partners (reduced cost of transport and communication) 3: Countries with a history of international trade. E.g, Sweden |
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Q: Which countries have lower levels of trade? |
A: 1: Larger economies (produce most of what they need themselves) 2: Few nearby trading partners 3: Limited history of international trade. E.g, U.S. |
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Level of Trade |
Measured by exports of goods and services as a percentage of GDP. |
