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Ch 16:International Finance
Unit 6 - Foundations of Macroeconomics
19
Economics
Undergraduate 1
02/05/2008

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Term
Balance of payments accounts
Definition
The accounts in which a nation records its international trading, borrowing and lending in a given period
Term
Current Account
Definition
Record of international receipts and payments in a given period - current account balance equals export minus imports, plus net interest and transfers received from abroad
Term
Capital Account
Definition
Record of foreign investment into Canada minus Canadian investment abroad in a given period
Term
Official settlements Account
Definition
Record of the change in Canadian official reserves in a given period
Term
Canadian official reservces
Definition
The governments holdings of foreign currency
Term
Net borrower
Definition
A country that is borrowing more from the rest of the world than it is lending to the rest of the world
Term
Net Lender
Definition
A country that is lending more to the rest of the world that it is broowing from the rest of the world
Term
Debtor nation
Definition
A country that during its entire history has borrowed more from the rest of the world than it has lent to it
Term
Creditor Nation
Definition
A country that duing its entirehistory has invested more in the rest of the world than other countries invested in it
Term
Private Sector Balance
Definition
Saving minus investment
Term
Government sector balance
Definition
Net taxes minus government expenditure on goods and services
Term
Foreign Exchange market
Definition
The market in which the currency of one country is exchanged for the currency of another
Term
Foreign exchange rate
Definition
The price at which one currency exchanges for another
Term
Currency appreciation
Definition
The rise in the value of one currency in terms of another currency
Term
Currency depreciation
Definition
The fall in the value of one currency in terms of another currency
Term
Canadian interest rate differential
Definition
The Canadian interest rate minus the foreign interest rate
Term
Purchasing Power Parity
Definition
Equal value of money - a situation in which money buys the same amount of goods and services in different currencies
Term
Interest rate parity
Definition
Equal inerest rates - a situation in which the interest rate in one currency equals the interest rate in another currency when exchange rate changes are taken into account
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