Unit 5

Question 1

Trade deficit

Answer 1

Importing more than exporting

Question 2

Trade surplus

Answer 2

Exporting more than importing

Question 3

Appreciation

Answer 3

When the money is worth more

Question 4

Depreciation

Answer 4

When the money is worth less

Question 5

Current account

Answer 5

Goods and services. Trade, net income, net transfers

Question 6

Financial account

Answer 6

Balance of assets

Question 7

Forex market

Answer 7

Y axis (currency compared over currency)
X axis (q of current currency)
Supply and demand, (standard)

Question 8

Shifters of forex

Answer 8

Interest rates
Tastes
Income
Inflation

Question 9

Interest rate

Answer 9

High interest is shifts demand to the right

Low intersst shifts demand to the left

Question 10

Tastes

Answer 10

Increase in tastes increases demeaned

Visa versa

Question 11

Income

Answer 11

Up in income = up in supply

Question 12

Price level

Answer 12

High inflation equals low demand

Question 13

Going up on the forex y axis

Answer 13

Appreciation

Question 14

Going down on forex y axis

Answer 14

Depreciation

Question 15

The balance of payments between two countries

Answer 15

Must be equal to zero ex. If China spends 300 dollars to America. Of 1000 then America must have 300 more