Macroeconomics: International Trade & Finance

These flashcards cover key vocabulary and concepts related to international trade and finance in macroeconomics.

Balance of Payments

Measures all international transactions in a year including exports, imports, and the purchase and sale of assets.

Exchange Rate

The value of one currency relative to a different currency.

Net Exports (XN)

The difference between a nation's exports of goods and services and imports of goods and services.

Trade Surplus

Occurs when exports are greater than imports.

Trade Deficit

Occurs when exports are less than imports.

Appreciation of currency

When a country's currency value increases relative to a foreign currency.

Depreciation of currency

When a country's currency value decreases relative to a foreign currency.

Foreign Exchange Market

A market in which currencies are traded and exchange rates are determined.

Shifters of Demand and Supply in Foreign Exchange Market

Preferences, Income, Price level, Interest Rates.

Net Capital Inflow

Occurs when foreigners buy more domestic assets, typically due to higher interest rates.

Real Interest Rate

The nominal interest rate adjusted for inflation, affecting capital flows.