Macroeconomics

an increase in the value of a currency as measured by the amount of foreign currency it can buy

a situation in which exports equal imports

an economy that does not interact with other economies in the world

a decrease in the value of a currency as measured by the amount of foreign currency it can buy

goods and services that are produced domestically and sold abroad

goods and services that are produced abroad and sold domestically

the purchase of foreign assets by domestic residents minus the purchase of domestic assets by foreigners

spending on domestically produced goods by foreigners (exports) minus spending on foreign goods by domestic residents (imports); the value of a nation's exports minus the value of its imports; also called the trade balance

the rate at which a person can trade the currency of one country for the currency of another

an economy that interacts freely with other economies around the world

a theory of exchange rates whereby a unit of any given currency should be able to buy the same quantity of goods in all countries

The Law of One Price

the rate at which a person can trade the goods and services of one country for the goods and services of another

RER = (Nominal Exchange Rate x Domestic Price)/ Foreign Price

the value of a nation's exports minus the value of its imports; also called net exports

an excess of imports over exports

an excess of exports over imports

• Improvements in:
• Transportation
• Telecummincation 
• Technological progress
• Government Trade Pocilies

• S = y-c-g 
• or
• S=I+NX
• or 
• S = I+NCO

E= Price of Foreign Good/ Price of Domestic Good