Chapter 17 – Exchange Rates And The Balance Of Payments Flashcards
Balance of payments
A summary of all the transactions that took place among the individuals, firms, and government units of one nation and those of all other nations during a year
Foreign exchange markets
Markets in which the money of one nation can be used to purchase the money of another nation
In payments
The receipts of its own or foreign money that individuals, firms, and governments of one nation obtained from the sale of goods and services abroad, or as investment income, remittances, and capitals inflows from abroad
Out payments
The expenditures of its owner or foreign currency that the individuals, firms, and government of one nation make to purchase goods and services, for remittances, as investment income, and capital outflows abroad
Current account
The section in the nations balance of payments that records it’s exports and imports of goods and services, it’s net investment income, and it’s net transfers
Debit
And accounting item that decreases the value of an asset such as the foreign money owned by the residents of a nation
Balance on goods and services
The exports of goods and services of a nation less its imports of goods and services in a year
Trade deficit
The amount by which a niche and imports of goods exceed its exports of goods
Trade surplus
The amount by which a nation’s exports of goods exceeds its imports of goods
Net investment income
The interest and dividend income received by the residents of a nation from residents of other nations less the interest and dividend payments made by the residents of the nation to the residents of other nations
Net transfers
The personal and government transfer payments made by one nation to residents of foreign nations, less the personal and government transfer payments received from residents of foreign nations.
Capital and financial account
The section of the nations international balance of payment statement that records the foreign purchases of assets in Canada and Canadians purchases of assets abroad
Official international reserves
Foreign currencies owned by the central bank of a nation
Balance on the capital and financial account
The foreign purchases of assets in a nation less it’s purchases of assets abroad in a year
Balance on current account
The exports of goods and services of a nation last its imports of goods and services plus it’s net investment income and net transfers in a year
International monetary fund or IMF
The international Association of nations formed after World War II to make loans of foreign monies to nations with temporary payment deficits and, until the early 1970s, to administer the adjustable pay system. It now makes loans to nations facing possible default on private or government bands
Balance of payments deficit
The amount by which the sum of the balance on the current account and the balance on the capital account is negative in a year
Balance of payments surplus
The amount by which the sum of the balance on the current account and the balance on the capital account is positive in a year
Exchange rate
The rate at which the currency of one nation is exchange for the currency of another nation
Flexible or floating exchange rate system
A rate of exchange determined by the international demand for and supply of a nations currency
Fixed exchange rate system
Rate of exchange that is prevented from rising or falling with changes and currently supplying demand
Depreciation
A decrease in the value of the dollar relative to another crazy, so I dollar buys a smaller amount of the foreign currency and therefore of foreign goods
Appreciation
An increase in the value of the dollar relative to another crazy, so a dollar buys a larger amount of the foreign currency and therefore of foreign goods.
Purchasing power parity theory
The idea that exchange rates between any two nations adjust to reflect the price level differences between the countries
Speculation
The activity of buying or selling with the motive of later reselling or rebuying for profit
International monetary reserves
The foreign currencies and such assets as gold Anisha me used to settle up payments deficit
Rate of exchange
The price paid in one’s own money to acquire one unit of a foreign currency; the rate at which the money of one nation is exchange for the money of another nation
Currency intervention
A government buying and selling of its own currency or foreign currencies to alter international exchange rates
Exchange control
The control of government may exercise over the quantity of four and cranes he demanded bite citizens and firms, and over the rate of exchange to limited so payments to it in payments or to eliminate a payments deficit
Export subsidies
Government payments to domestic producers to enable them to reduce the price of a good or service to foreign buyers
Managed floating exchange rates
Exchange rates that are allowed to change as a result of changes and crazy supply and demand but it times are altered by governments the other buying and selling a particular currencies
