Chap 10 and 16 Flashcards
the gap, if any, between a nation’s exports and imports
balance of trade (trade balance)
a broad measure of the balance of trade that includes trade in goods and services, as well as international flows of income and foreign aid
current account balance
the dollar value of exports divided by the dollar value of a country’s GDP
exports of goods and services as a percentage of GDP
the international flows of money that facilitates trade and investment
financial capital
the balance of trade looking only at goods
merchandise trade balance
the total of private savings and public savings (a government budget surplus)
national savings and investment identity
“one way payments” made by governments, private entities, or individuals that are sent abroad with nothing received in return
unilateral transfers
when a currency is worth more in terms of other currencies; also called strengthening
appreciating
the process of buying a good and selling goods across borders to take advantage of international price differences
arbitrage
when a currency is worth less in terms of other currencies; also called weakening
depreciating
a country that is not the United States uses the U.S. dollar as its currency
dollarize
a country lets the value of its currency be determined in the exchange rate market
floating exchange rate
purchasing more than ten percent of a firm or starting an new enterprise in another country
foreign direct investment (FDI)
the market in which people use one currency to buy another currency
foreign exchange market
an exchange rate policy in which the central bank sets a fixed and unchanging value for the exchange rate
hard peg
