Ch 35 - International Finance Flashcards
exchange rate
the price of one country’s currency expressed in terms of another’s; the domestic price of a foreign currency
equilibrium price
the price at which the quantity of a good demanded in a given time period equals the quantity supplied
balance of payments
a summary record of a country’s international economic transactions in a given period of time
trade deficit
the amount by which the value of imports exceeds the value of exports in a given time period
depreciation (currency)
a fall in the price of one currency relative to another
appreciation
a rise in the price of one currency relative to another
foreign-exchange markets
places where foreign currencies are bought and sold
gold standard
an agreement by countries to fix the price of their currencies in terms of gold; a mechanism for fixing exchange rates
market shortage
the amount by which the quantity demanded exceeds the quantity supplied at a given price; excess demand
balance-of-payments deficit
an excess demand for foreign currency at current exchange
balance-of-payments surplus
an excess demand for domestic currency at current exchange rates
foreign-exchange reserves
holdings of foreign exchange by official government agencies, usually the central bank or treasury
gold reserves
stocks of gold held by a government to purchase foreign exchange
flexible exchange rates
a system in which exchange rates are permitted to vary with market supply-and-demand conditions; floating exchange rates
managed exchange rates
a system in which governments intervene in foreign-exchange markets to limit but not eliminate exchange-rate fluctuations; “dirty floats”
