AP Macro Unit 6 Vocab

balance of payments

The record of all economic transactions between the residents of a country and the rest of the world over a certain period, typically a year. It includes the current account, capital and financial account, and sometimes changes in reserves.

current account

Part of the balance of payments that records transactions involving the export or import of goods and services, primary income (such as wages and investment income), and secondary income (such as transfers between countries).

capital and financial account

Another part of the balance of payments that records transactions involving financial assets and liabilities, including foreign direct investment, portfolio investment, and changes in reserve assets.

imports

Goods and services purchased from foreign countries.

exports

Goods and services sold to foreign countries.

net exports

The difference between a country's exports and imports.

net foreign income

The difference between the income earned by residents of a country from foreign investments and the income earned by foreigners from investments in the country.

net unilateral transfers

The net amount of gifts, aid, and other transfers between countries that are not made in exchange for goods or services.

foreign direct investment

Investment made by a company or individual in one country in business interests in another country, in the form of either establishing business operations or acquiring business assets.

financial capital

Money used by businesses to purchase goods, technology, or other items needed for production.

capital inflow

The flow of funds into a country as a result of investments, loans, or other financial transactions.

capital outflow

The flow of funds out of a country as a result of investments, loans, or other financial transactions.

deficit

When a country's expenditures exceed its revenues in a given period.

surplus

When a country's revenues exceed its expenditures in a given period.

debit

In the balance of payments, a record of funds flowing out of a country.

credit

In the balance of payments, a record of funds flowing into a country.

exchange rate

The price of one currency in terms of another currency.

appreciation

An increase in the value of one currency relative to another.

depreciation

A decrease in the value of one currency relative to another.

tariff

A tax imposed on imported goods and services.

quota

A limit on the quantity of a particular good that can be imported into a country.

capital flows

The movement of money for the purpose of investment, trade, or financing from one country to another.