Economics Today The Macro View Ch. 33 Exchange Rat
Economics Today The Macro View Ch. 33 Exchange Rat
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Economics Today The Macro View Ch. 33 Exchange Rates and the Balance of Payments
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Economics Today The Macro View Ch. 33 Exchange Rat
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Economics Today The Macro View Ch. 33 Exchange Rat
Economics Today The Macro View Ch. 33 Exchange Rates
and the Balance of Payments
1. Balance of Trade ️: The difference between exports and imports of physical goods.
2. Balance of Payments ️: A system of accounts that measures transactions of goods, services,
income, and financial asset...
Economics Today The Macro View Ch. 33 Exchange Rates
and the Balance of Payments
1. Balance of Trade ✔️: The difference between exports and imports of physical goods.
2. Balance of Payments ✔️: A system of accounts that measures transactions of goods, services,
income, and financial assets between domestic households, businesses, governments, and residents of
the rest of the world during a specific time period.
3. Accounting Identities ✔️: Values that are equivalent by definition.
4. Disequilibrium ✔️: If family expenditures exceed family income and this situation is financed by
borrowing, the household may be considered to be in disequilibrium because such a situation cannot
continue indefinitely.
5. Current Account ✔️: A category of balance of payments transactions that measures the exchange of
merchandise, the exchange of services, and unilateral transfers.
6. Current Account Surplus ✔️: If the sum of net exports of goods and services plus net unilateral
transfers plus net investment income exceeds zero.
,7. Current Account Deficit ✔️: If the sum of net exports of goods and services plus net unilateral
transfers plus net investment income is negative.
8. Capital Account ✔️: A category of balance of payments transactions that measures flow of financial
assets.
9. Official Reserve Assets ✔️: Includes foreign currencies, gold, Special Drawing Rights (SDRs), reserve
position in the IMF, and financial assets held by an official agency.
10. Special Drawing Rights (SDRs) ✔️: Reserve assets created by the IMF for countries to use in settling
international payment obligations.
11. International Monetary Fund (IMF) ✔️: An agency founded to administer an international foreign
exchange system and to lend to member countries that had balance of payments problems.
12. Foreign Exchange Market ✔️: A market in which households, firms, and governments buy and sell
national currencies.
13. Exchange Rate ✔️: The price of one nation's currency in terms of the currency of another country.
, 14. Flexible Exchange Rates ✔️: Exchange rates that are allowed to fluctuate in the open market in
response to changes in supply and demand.
15. Appreciation ✔️: An increase in the exchange value of one nation's currency in terms of another
nation.
16. Depreciation ✔️: A decrease in the exchange value of one nation's currency in terms of another
nation.
17. Slope of Demand Curve ✔️: Downward sloping.
18. Market Determinants of Exchange Rates ✔️: Includes changes in real interest rates, changes in
consumer preferences, and perceptions of economic stability.
19. Bretton Woods and the IMF ✔️: The creation of the IMF in 1944 by representatives of the world's
capitalist countries.
20. Foreign Exchange Risk ✔️: The possibility that changes in the value of a nation's currency will result
in variations in the market value of assets.
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