foreign exchange Flashcards
foreign exchange
the buying and selling of a currency
exchange rate
a function of the supply and demand for a currency
increase of exchange rate
appreciated currency
decrease of exchange rate
depreciated currency
depreciate
the loss of value of a country’s currency with respect to a foreign currency
MORE units of a dollar needed to buy one unit of another currency
appreciate
the increase of a value of a country’s currency with respect to a foreign currency
LESS units of a dollar needed to buy one unit of another currency
demand for currency
comes from foreigners (changing from their currency to the listed currency)
supply for currency
the country that the currency is from
they place the money into the supply
changes for exchange rates
consumer tastes
relative income
relative price level
speculation of relative interest rates
appreciated effect on net exports
increase imports
decrease exports
a negative net export
depreciated effect on net exports
decrease imports
increase exports
a positive net export
more interest rates
appreciation
less interest rates
depreciation
exchange rate regimes
fixed exchange rate
floating exchange rate
fixed exchange rate
the government activity manage the country currency
floating exchange rate
the market determines the value of the country currency
used by the US
tariff
tax on imports
quota
a limit on trade
quota and tariffs
decrease the supply of the currency
restricting trade (fewer transactions)
current accounts - liabilities
don’t have liabilities
financial account - liabilities
do have liabilities
higher real interest rate
more inflow of financial capital
lower real interest rates
more outflow of financial capital
current account
goods and services
factor income
transfer payments
