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Definition
The price of one currency expressed in terms of another. It is the number of units of one currency that can be exchanged for another.
What can cause exchange rates to change? Inflation (more money chasing fewer products) weakens dollar. Psychological reasons
Weak currency effects: if dollar is weaker, we export more. If dollar is stronger, we import more |
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| risk that arises from changes in the price of one currency relative to another |
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| All forms of money that are traded internationally, including foreign currencies, bank deposits, checks, and electronic transfers |
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| The global marketplace for buying and selling national currencies |
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| supply and demand dictate free markets, consumer dictates what/ how much is produced |
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| government and those in power control economic governmental actions |
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| a demand economy, but we do allow monopolies (electric) and protectionism (protecting our country’s welfare) |
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| The monetary authority in each nation that regulates the money supply and credit, issues currency, and manages the exchange rate of the nation’s currency - puts money in the system to maintain prices |
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| The amount by which a nation’s exports exceed its imports for a specific period of time |
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| The amount by which a nation’s imports exceed its exports for a specific period of time |
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| Government action to reduce the official value of its currency, relative to other currencies |
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| Government action to increase the official value of its currency, relative to other currencies |
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| The annual accounting of all economic transactions of a nation with all other nations - |
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| Immunizing the balance sheet |
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| making sure assets/currency in balance |
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| International Monetary Fund (IMF) |
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| An international agency that aims to stabilize currencies by monitoring the foreign exchange systems of member countries, and lending money to developing economies |
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| An international agency that provides loans and technical assistance to low and middle-income countries with the goal of reducing poverty |
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| International monetary system |
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| Institutional framework, rules, and procedures by which national currencies are exchanged for one another |
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| The collective of financial institutions that facilitate and regulate investment and capital flows worldwide, such as central banks, commercial banks, and national stock exchanges |
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| The tendency of a financial or monetary crisis in one country to spread rapidly to others due to ongoing financial integration worldwide |
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| The buying and selling of government securities by a central bank to maintain the exchange rate of a country’s currency at some acceptable level |
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| fixed the US Dollar to the gold exchange rate, and other foreign currencies to the US Dollar, thus keeping everything fixed. It’s demise came about because of Vietnam, and in 1971 Nixon officially broke the tie between the US Dollar and gold |
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| Special Drawing Right (SDR) |
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Definition
| A unit of account or a reserve asset, a type of currency used by central banks supplement their reserves in transactions with the IMF |
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