Chapter 18 - Open-Economy Macroeconomics: Basic Concepts

Appreciation

________- An increase in the value of a currency as measured by the amount of foreign currency it can buy.

Depreciation

________- a decrease in the value of a currency as measured by the amount of foreign currency it can buy.

nominal exchange rate

The ________ between the currencies of two countries must reflect the price levels in those countries.

Net capital outflow

________- the purchase of foreign assets by domestic residents minus the purchase of domestic assets by foreigners.

government policies

The ________ that affect foreign ownership of domestic assets.

Trade surplus

________ - the excess of exports over imports.

Trade balance

________- the value of a nations exports minus the value of its imports; also called net exports.

Nominal exchange rate

________: the rate at which a person can trade the currency of one country for the currency of another.

net capital outflow

When a nations saving exceeds its domestic investment, its ________ is position, indicating that the nation is using some of its savings to buy assets abroad 18.2: The Prices for International Transactions: Real and Nominal Exchange Rates.