International Investment & Money Flashcards
What is money?
A medium of exchange
A way to store value
A commodity that can be traded
What is the interest rate?
Interest rate is a price for lending and depositing money
What is the exchange rate?
Exchange rate is a price for converting one country’s money into another country’s money
What is capital?
Any form of wealth that can be converted into money (cash, bonds, stocks, etc.)
What is liquidity?
The efficiency or ease with which an asset or security can be converted into ready cash without affecting its market price
What is international capital mobility?
The ability of investors to move their money across national borders, typically involves exchanging one currency for another
What is balance of payment?
The difference in total value between payments into and out of a country over a period of time
What is monetary policy?
The policy adopted by the monetary authority of a nation to affect monetary and other financial conditions to accomplish broader objectives like high employment and price stability
What is a quota?
A government-imposed trade restriction that limits the number or monetary value of goods that a country can import or export over a period of time
What is a floating exchange rate?
A type of exchange rate in which a currency’s value is allowed to fluctuate in response to foreign exchange market events
What is a fixed exchange rate?
A type of exchange rate in which a currency’s value is fixed by a monetary authority against the value of another currency
What is a Multinational Corporation (MNC)?
Controls and manages production establishment plants in at least two countries
What is a Foreign Direct Investment (FDI)?
Cross-border investment in which a corporation based in one country owns a productive asset located in a second country, through construction or purchase
What is vertical integration?
The combination in one company of two or more stages of production normally operated by separate companies
What is horizontal integration?
The process of a company increasing production of goods or services at the same level of the value chain, in the same industry
