| A | B |
|---|
| Closed Economy | A model that assumes there is no foreign sector (imports and exports) |
| Autarky | A situation in which a country does not trade with other countries. |
| Domestic Price | The equilibrium price of a good in a nation without trade. |
| World Price | The global equilibrium price of a good when nations engage in trade. |
| Domestic Demand Curve | A demand curve that shows the quantity of a good demanded by only domestic consumers at all prices for that good. |
| Domestic Supply Curve | A supply curve that shows the quantity of a good supplied by only domestic suppliers at all prices for that good. |
| Balance of Payments statement | A summary of the payments received by the US from foreign countries and the payments sent by the US to foreign countries. |
| Current Account | This account shows current import and export payments of both goods and services and investment income sent from the US to foreign investors, and investment income received by US citizens who invest abroad. |
| Financial Account | This account shows the flow of investment on real or financial assets between a nation and foreigners. |
| Official Reserves Account | The Fed's adjustment of a deficit or surplus in the current and financial accounts by the addition or subtraction of foreign currencies so that the balance of payments is zero. |
| Capital Inflow | The net inflow of funds into a country. The difference between the total inflow of foreign funds to the home country and the total outflow of domestic funds to other countries. |
| Exchange Rate | The amount of one currency that must be given up to get one unit of the second currency. |
| Appreciating (Depreciating) Currency | When the value of a currency is rising (falling) relative to another currency, it is said to be appreciating (depreciating). |
| Determinants of Exchange rates | External factors that increase the price of one currency relative to another. |
| Free Trade | Trade unhindered by regulations like tariffs. |
| Globalization | The phenomenon of growing economic linkages among countries. |
| Revenue Tariff | An excise tax levied on goods not produced in the domestic market. |
| Protective Tariff | An excise tax levied on an imported good produced in the domestic market so that the good maybe protected from foreign competition. |
| Import Quota | A limitation on the amount of a good that can be imported into the domestic market. |
