Chapter 5 The Global Economy Flashcards

1
Q

exchange rate

A

Exchange rate are the price of one currency stated in the terms of another currency
example one euro equals $.90

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2
Q

Floating exchange rates

A

Exchange rate set by the market are called floating exchange rates.

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3
Q

What makes the value of a currency increase.

A

Exports

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4
Q

What decreases the value of a currency

A

Imports

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5
Q

Exchange rates affects the prices of

A

Goods offered for sale in international market

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6
Q

Balance of payment accounts for the value on international accounts

A

Is divided into current account and capital and financial accounts

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7
Q

The current account

A

Considers goods and services ,exports and imports + certain money flows

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8
Q

The capital and financial account

A

Considers changes in foreign owned assets, including government assets.

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9
Q

The current account and capital and financial accounts plus statistical discrepancy always sum to

A

Zero

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10
Q

How do Countries try to manipulate the terms of trade to their advantage.

A

They use tariffs ( taxes on imports)
Quotas
Health and quality standards
Licensing requirements to block imports.
Subsidies can also be used to increase exports.

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11
Q

What has the GATT General Agreement on Tariffs and Trade and its successor the World Trade Organization successfully accomplished?

A

They have dramatically lowered tariffs and other trade barriers around the world.
Trade has exploded as they have done so.

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12
Q

Trade deficit

A

-occurs when one country buys more foreign goods than it sells to other countries. When imports exceed exports.

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13
Q

Tariff

A

-is a tax that applies only to goods entering a country. It is exactly like the SalesTax usually charged to porches goods inside of a country, except that it is not charged against domestic goods.

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14
Q

Trade barrier

A

-method of limiting trade with other countries.

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15
Q

World trade organization

A

-Administers the rules governing trade between its 144 members. Helps producers, importers, and exporters conduct their business and ensure that trade flows smoothly.

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