Macro Unit 6 ID Terms - Russell

Balance of payments

A record of all economic transactions between a country and the rest of the world during a specific period, including trade, investment, and financial flows.

Current account

A section of the balance of payments that measures the flow of goods, services, income, and unilateral transfers between countries.

Capital and financial account

A section of the balance of payments that records the flow of financial assets, such as investments and loans, between countries.

Imports

Goods and services purchased from foreign countries and brought into a nation for consumption or resale.

Exports

Goods and services produced domestically and sold to foreign buyers.

Net exports

Exports - Imports

Net foreign income

The difference between income earned by domestic residents from foreign investments and income earned by foreigners from domestic investments.

Net unilateral transfers

One-way transfers of money or goods between countries with nothing received in return (e.g., foreign aid, remittances, gifts).

Foreign direct investment

Investment made by a firm or individual in one country into business interests located in another country, typically involving management control.

Financial capital

Money used for investment in financial assets such as stocks, bonds, or loans, or for funding physical capital.

Capital inflow

The movement of financial capital into a country from abroad, such as when foreigners buy domestic assets or invest domestically.

Capital outflow

The movement of financial capital out of a country to invest in foreign assets or businesses.

Deficit

Occurs when payments made to foreigners exceed payments received from abroad (imports > exports).

Surplus

Occurs when payments received from abroad exceed payments made to foreigners (exports > imports).

Debit

An entry in the balance of payments that represents a payment to foreigners (money flowing out of the country).

Credit

An entry in the balance of payments that represents a payment from foreigners (money flowing into the country).

Exchange rate

The price of one country's currency in terms of another country's currency.

Appreciation

An increase in the value of a country's currency relative to another currency — it buys more foreign currency than before.

Depreciation

A decrease in the value of a country's currency relative to another currency — it buys less foreign currency than before.

Tariff

A tax imposed on imported goods, usually to protect domestic industries or raise government revenue.

Quota

A limit set by the government on the quantity or value of a good that can be imported.

Capital flows

The movement of money for investment, trade, or business production across countries — includes both capital inflows and outflows.