Chapter 17 – Exchange Rates And The Balance Of Payments

Question 0

Balance of payments

Answer 0

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

Question 1

Foreign exchange markets

Answer 1

Markets in which the money of one nation can be used to purchase the money of another nation

Question 2

In payments

Answer 2

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

Question 3

Out payments

Answer 3

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

Question 4

Current account

Answer 4

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

Question 5

Debit

Answer 5

And accounting item that decreases the value of an asset such as the foreign money owned by the residents of a nation

Question 6

Balance on goods and services

Answer 6

The exports of goods and services of a nation less its imports of goods and services in a year

Question 7

Trade deficit

Answer 7

The amount by which a niche and imports of goods exceed its exports of goods

Question 8

Trade surplus

Answer 8

The amount by which a nation’s exports of goods exceeds its imports of goods

Question 9

Net investment income

Answer 9

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

Question 10

Net transfers

Answer 10

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.

Question 11

Capital and financial account

Answer 11

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

Question 12

Official international reserves

Answer 12

Foreign currencies owned by the central bank of a nation

Question 13

Balance on the capital and financial account

Answer 13

The foreign purchases of assets in a nation less it’s purchases of assets abroad in a year

Question 14

Balance on current account

Answer 14

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

Question 15

International monetary fund or IMF

Answer 15

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

Question 16

Balance of payments deficit

Answer 16

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

Question 17

Balance of payments surplus

Answer 17

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

Question 18

Exchange rate

Answer 18

The rate at which the currency of one nation is exchange for the currency of another nation

Question 19

Flexible or floating exchange rate system

Answer 19

A rate of exchange determined by the international demand for and supply of a nations currency

Question 20

Fixed exchange rate system

Answer 20

Rate of exchange that is prevented from rising or falling with changes and currently supplying demand

Question 21

Depreciation

Answer 21

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

Question 22

Appreciation

Answer 22

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.

Question 23

Purchasing power parity theory

Answer 23

The idea that exchange rates between any two nations adjust to reflect the price level differences between the countries

Question 24

Speculation

Answer 24

The activity of buying or selling with the motive of later reselling or rebuying for profit

Question 25

International monetary reserves

Answer 25

The foreign currencies and such assets as gold Anisha me used to settle up payments deficit

Question 26

Rate of exchange

Answer 26

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

Question 27

Currency intervention

Answer 27

A government buying and selling of its own currency or foreign currencies to alter international exchange rates

Question 28

Exchange control

Answer 28

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

Question 29

Export subsidies

Answer 29

Government payments to domestic producers to enable them to reduce the price of a good or service to foreign buyers

Question 30

Managed floating exchange rates

Answer 30

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