Macroeconomics 6.1, 6.2, 6.3, 6.4

macroecono

Protectionism

Placing high tariffs on imports and limiting the number of foreign goods to protect local businesses

Tariff

Taxes on imports

Import Quota

Limit on the quantity of a good that can be imported within a given period

Balance of payments accounts

A summary of the country’s transactions with other countries

Current account

Difference between a country’s total exports and total imports

Balance of payment on goods and services

summarises the economic transactions of an economy with the rest of the world

Trade balance

Difference between a country’s exports and imports of goods alone- not including services

Financial account

Account tracks the ownership of assets held by foreigners and ownership of foreign assets

Transactions that involve the sale or purchase of assets, and therefore do create future liabilities

Capital Inflow

The amount of capital coming into a country, for example in the form of foreign investment

Capital Outflow

Movement of financial capital (money) out of a country to another country

Foreign exchange market

A global electronic market that traders around the world use to buy and sell currencies, and determines exchange rates

Supply for currency

Demand for currency

Exchange rate

the prices at which currencies trade

Appreciate

When a currency becomes more valuable in terms of other currencies

Depricate

When a currency becomes less valuable in terms of other currencies

Equilibrium exchange rate

Real exchange rate

Exchange rates adjusted for international differences in aggregate price levels

Purchasing power parity

A useful tool for analyzing exchange rates, closely connected to the concept of the real exchange rate.

Exchange rate regime

Rule governing policy toward the exchange rate

Fixed exchange rate

When the government keeps the exchange rate against some other currency at or near a particular target

Floating exchange rate

When the government lets the exchange rate go wherever the market takes it

Exchange market intervention

Government purchases or sales of currency in the foreign exchange market

Foreign exchange reserves

Foreign exchange controls

Devaluation

A reduction in the value of a currency that is set under a fixed exchange rate regime

Revaluation

An increase in the value of a currency that is set under a fixed exchange rate regime