10--Chapter10 Open Economy.ppt

Chapter 10
Open Economy
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Topics to be Discussed
National e Accounting and the Balance of Payments & other concepts
The determination of exchange rate
floating exchange rate system
Fixed exchange rate system
Trade environment and policy
Summary of the open economy
National e Accounting and the Balance of Payments & Other Concepts
Balance of Payment:recording the financial capital debit and credit、purchases or sales of investment assets 、exports or imports of goods or services, etc. Balance of payments include capital account、current account and balance account.
The Balance of Payments Accounts:a systematical report forms of all economic transactions in a period, including current item、capital item and balance item.
National e Accounting and the Balance of Payments & Other Concepts
Current item:or goods and labor services item, including: goods (imports and exports); labor services, such as, transportation、insurance、traveling、investment labor services (interest、dividend、profit) and other labor;international unilateral transfer, such as religion、charity、donation to the education、non-war reparations, etc.
Capital item:all of the exchange activities facing exterior capital and debts ,such as investment 、stocks and bond trading, etc.
Official repertory item:the trading of national currency department , including gold、foreign exchange repertory ,etc. If the credit is larger than the debit, then the item will increase; otherwise, if the debit is larger than the credit, then the item will decrease.
Error item:balance through this item if the credit does equal to the debit.
National e Accounting and the Balance of Payments & Other Concepts
Capital account:recording international investment and debit and credit. International investment includes the foreign real estate 、foreign corporations’ stocks 、foreign governments’ bonds of individual、corporation and government, and the domestic real