Trade Deficits and Sovereign Currencies

These flashcards cover essential vocabulary related to trade deficits and sovereign currencies as discussed in macroeconomics.

Trade Deficit

A situation where a country's imports exceed its exports (NX < 0).

Trade Surplus

A situation where a country's exports exceed its imports (NX > 0).

Current Account

Measures the trade in goods and services and income payments between countries.

Balance of Payments

Summary of all transactions made between residents of a country and the rest of the world.

Financial Account

Tracks cross-border investments and ownership of financial assets.

Capital Account

Records capital transfers and transactions in non-produced, non-financial assets.

Bucks

Currency units specific to islands A and B in trade scenarios.

Financial Intermediary

Institutions that channel funds from savers to borrowers.

Net Exports (NX)

The difference between a country's total value of exports and total value of imports.

Statistical Discrepancy

The difference between the amounts of money accounted for in the Balance of Payments.

Primary Income Payments

Payments received by residents from foreign investments and compensation.

Secondary Income Payments

Transfers like gifts, remittances, and foreign aid received or made by residents.

Imports

Goods and services bought by a country from another country.

Exports

Goods and services produced by a country and sold to another country.

Tariff

A tax imposed on imported goods to protect domestic industries.

Sovereignty

The authority of a state to govern itself or another state.

Exchange Rate

The price at which one currency can be exchanged for another.

Asset Repatriation

The process of bringing foreign funds back into the home country.

Economic Growth

Increase in the production of goods and services over a specific period.

Debt Forgiveness

The cancellation of a debt that is owed.

Investment Grants

Funds provided for specific investments without the need for repayment.