Term
|
Definition
| Anything used to exchange. Generally accepted form of trade. Value isn't in object itself. Backed by trust |
|
|
Term
|
Definition
| most nations have unique currencies, trade between nations must be valued in money, different nations money change in relation to each other. |
|
|
Term
| Gold Coin and Bullion Standards |
|
Definition
| Money used to be tied to gold. |
|
|
Term
|
Definition
| Not enough gold to rebuild Europe in WWII. US dollar delcared fixed exchange rate to gold, other nations fixed to the dollar. After Vietnam war, this system was removed no more US gold standard, dollar tied simply to trust |
|
|
Term
| IMF (International monetary fund) |
|
Definition
| Promote exchange rate stability, facilitate international flow of currency, promote monetary cooperation, establish a multilateral system of payments, resources available to nations experiances balance of payment problems, special drawing rights (SDR) |
|
|
Term
| SDR (Special Drawing Rights) |
|
Definition
Quasi international currency...made up of four other currencies, use the dollar to buy your own currency so less curenncy is in circulation. Value of SDR is these four
US Dollar 41%, Euro 38%, Yen 11%, Pound 10% |
|
|
Term
|
Definition
| Set policies for currency manipulation, buy and sell currencies to try to affect value and hold reserves in gold and other currencies, |
|
|
Term
| PPP Theory (Purchasing power parity) |
|
Definition
| The number of units of a country’s currency required to buy the same amount of goods and services in the domestic market that one unit of income would buy in another country |
|
|
Term
|
Definition
| 100 USD to 50 Pounds is a 2 to 1 ratio or a .5 to 1 ratio depending. When you are US, divide your price by other price to get a 2 to 1 ratio. ^_^ |
|
|
Term
|
Definition
| exchange rate will change as realative prices change. You can compare the price of a big mac to guess what will happen to currencies |
|
|
Term
|
Definition
| Linking interest rate and inflation. nominal interest r=real interest R + inflation. |
|
|
Term
| International Fisher Effect |
|
Definition
| Currency with LOWER interest rate will Strengthen |
|
|
Term
|
Definition
| Long term not short term, government has short term effects. |
|
|
Term
|
Definition
| Currency markets react to changing information flows, theory coming from geography. |
|
|
