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When a producer can create a given amount of output with the smallest amount of inputs.
When the government spends more money than it receives.
Money, machinery, and education put toward a business to increase its productivity.
When a producer has a lower opportunity cost of production for an item than another producer's.
Goods and services purchased by consumers.
The relative amount of money needed to maintain a given lifestyle.
Numbers that tell how much foreign product can be purchased with similar domestic product.
Goods sent to another country for sale.
Trade with which the government does not interfere.
Products that consumers, manufacturers, and governments exchange.
Goods produced in a foreign country and consumed in a domestic country.
Money that enters a country or household.
Money spent to improve a company's growth and productivity.
The difference between exports and imports.
The total amount of investment in a country that results from trade deficits. Net foreign investment always equals net exports.
The amount of foreign currency that exchangeable for domestic currency.
The amount of output valued in currency dollars.
What is given up in pursuing one option over another.
Goods and services produced.
Governmental policies that serve to help developing domestic industries.
When a government limits the amount of a given good that can be imported. Imposing quotas is a protectionist policy.
Numbers that describe the relative real value of foreign and domestic goods.
Grants paid by the government to producers to help them develop. Subsidizing is a protectionist policy.
Fees charged by the government on imported goods to help raise the price and decrease the quantity sold. Use of tariffs is a protectionist policy.
When goods from one producer are exchanged for goods from another producer. In this case, goods can be very broadly interpreted.
Exports minus imports.
A trade deficit occurs when a country imports more than it exports.
A trade surplus occurs when a country exports more than it imports.
| Output = income Y = C + I + G + NX | Y = C + I + G + NX |
| Net Exports | Net Exports = exports - imports |
| Real Exchange Rate | Real exchange rate = ((nominal exchange rate)(domestic price)) /(foreign price) |
| Nominal Exchange Rate | Nominal exchange rate = (price of foreign currency) / (price of domestic currency) |
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