Want to Rev Up the Economy? Don't Worry About the Trade Deficit - Vocabulary Flashcards

Vocabulary flashcards covering key macroeconomic terms, key figures, reports, and financial dynamics from N. Gregory Mankiw's article on trade deficits and capital inflows.

Gross Domestic Product (GDP)

The sum of consumption spending, investment spending, government purchases, and the net exports of goods and services.

Trade Deficit

An economic condition where imports exceed exports, which in recent years amounted to about $\$500\,\text{billion}$ a year in the United States.

Trade Deficit Drag

The concept argued by Peter Navarro and Wilbur Ross that eliminating the trade deficit would increase gross domestic product and employment.

Capital Assets

Assets in the United States purchased by foreign entities, such as stocks, bonds, and direct investments in plants, equipment, and real estate.

Net Foreign Ownership of American Capital Assets

The total net value of U.S. capital assets owned by foreigners, which rose to about $\$8\,\text{trillion}$ from $\$2.5\,\text{trillion}$ at the end of $2010$.

United States Treasuries

U.S. government debt securities considered a premier safe place for international investors to park their wealth.

Dollar Appreciation Mechanics

The macroeconomic process where foreigners moving assets into the United States supply foreign currency and demand dollars, causing the dollar to strengthen, which makes exports more expensive and imports cheaper.

Tariff Market Effect

The mechanism where tariffs increase import prices and reduce dollar supply in foreign-exchange markets, causing dollar appreciation that makes American exports less competitive and offsets tariff effects on imports.

Budget Deficit Expansion

An increase in the government's deficit caused by tax cuts and infrastructure spending, which tends to raise interest rates, attract international capital, and worsen trade deficits.

Scoring the Trump Economic Plan: Trade, Regulatory and Energy Policy Impacts

A September campaign report authored by Peter Navarro and Wilbur Ross that highlighted concern over the trade deficit.

Peter Navarro

An economics professor at the University of California, Irvine, who co-authored the Trump campaign report on economic and trade policy.

Wilbur Ross

An investor chosen to be secretary of commerce who co-authored the Trump campaign report on economic and trade policy.

N. Gregory Mankiw

A professor of economics at Harvard University and author of the Economic View article "Want to Rev Up the Economy? Don't Worry About the Trade Deficit".

Post-Election 10-Year Treasury Bond Surge

An increase of $46\,\text{basis points}$ ($0.46$ of a percentage point) in the interest rate on $10\text{-year}$ Treasury bonds in the $10\,\text{days}$ following Donald J. Trump's victory.