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Open economy - Coggle Diagram

- - - - Net exports (NX) are the value of a nation’s exports minus the value of its imports.
        
        Net exports are also called the trade balance.
    - - Exports > Imports
    - - The exchange rates at which people can use domestic currency to buy foreign currencies.
      - The incomes of consumers at home and abroad.
      - The prices of goods at home and abroad.
      - The costs of transporting goods from country to country.
      - The tastes of consumers for domestic and foreign goods.
      - The policies of the government toward international trade.
    - - Net capital outflow refers to the purchase of foreign assets by domestic residents minus the purchase of domestic assets by foreigners.
      - NCO= Acquisition of foreign assets by residents – Acquisition of domestic assets by nonresidents
      - A positive NCO of a country, for instance Malaysia, means that Malaysia invests more outside than the world invests in Malaysia and vice versa.
      - Variables that Influence Net Capital Outflow
        
        The real interest rates being paid on foreign assets.
        
        The real interest rates being paid on domestic assets.
        
        The perceived economic and political risks of holding assets abroad.
        
        The government policies that affect foreign ownership of domestic assets.
  - - - Net capital outflow (NCO) = Net export (NX)
- - - - In units of foreign currency per one Malaysia RM.
      - And in units of Malaysia ringgit per one unit of the foreign currency (more common from the perspective of Malaysian)