AP Macroeconomics Unit 6 Vocabulary

Closed economy

Do not trade with other economies in the world

Open economy

Trade freely with other economies around the world

Exports

Goods and services that are sold to other countries

Imports

Goods and services purchased from other countries

Trade surplus

Exports are greater than Imports

Trade deficit

Exports are less than Imports

Balanced trade

Exports equal Imports

Current account

An accounting record of a nation's exports and imports

Capital and financial account

A record for the payments for assets as well as financial capital transfers between countries

Net capital inflow

Balance of the purchase and sales of financial assets by domestic and foreign residents

Forex

Is a form of exchange market for the global trading of currencies

Exchange rate

Rate at which a person can purchase currency of another country

Appreciation

Increase in the purchasing power/value of a currency; amount of a foreign currency it can buy

Depreciation

Decrease in the purchasing power/value of a currency; amount of a foreign currency it can buy