Content 1. Trade balance and net capital outflow 2. Saving and investment in a small open economy 2.1 The model 2.2 How policy influence the trade balance 3. Exchange rate 3.1 nominal and real exchange rate 3.2 The determinants of real exchange rate 3.3 How policy influence the real exchange rate 3.4 The determinants of nominal exchange rate 3.5 The purchasing-power parity(购买力平价) 4. Chapter summary CHAPTER 8 The Open Economy slide 2 CHAPTER 8 The Open Economy slide 2 Content 1. Trade balance and net capital outflow 2. Saving and investment in a small open economy 2.1 The model 2.2 How policy influence the trade balance 3. Exchange rate 3.1 nominal and real exchange rate 3.2 The determinants of real exchange rate 3.3 How policy influence the real exchange rate 3.4 The determinants of nominal exchange rate 3.5 The purchasing-power parity (购买力平价) 4. Chapter summary