Term
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Definition
| The purchase, sale, or exchange of goods and services across national borders |
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Term
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Definition
| A tariff levied as a percentage of the stated price of an imported product. |
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Term
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Definition
| A tariff levied as a specific fee for each unit (measured by a number, weight...etc.) |
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Term
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Definition
| A tariff levied on an imported product and calculated partly as a percentage of its stated price and partly as a specific fee for each unit. |
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Term
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Definition
| A restriction on the amount (measured in units or weight) of a good that can enter or leave a country during a certain period of time |
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Term
| voluntary export restraint (VER) |
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Definition
| A quota that a nation imposes on its own exports, usually at the request by another nation |
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Term
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Definition
| A lower tariff rate for a certain quantity of imports and a higher rate for quantities that exceed the quota |
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Term
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Definition
| A complete ban on trade (imports and exports) in one or more products with a particular country |
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Term
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Definition
| A nontariff barrier that uses regulatory controls or bureaucratic rules designed to impair the flow of imports into a country |
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Term
| local content requirements |
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Definition
| Laws stipulating that producers in the domestic market must supply a specified amount of a good or service |
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Term
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Definition
| Restrictions on the convertibility of a currency into other currencies |
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Term
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Definition
| Mercantilist nations' belief that the world's wealth was limited and that a nation could increase its share of the pie only at the expense of its neighbors |
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Term
| neomercantilism/economic nationalism |
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Definition
| The act of trying to maintain a trade surplus and expand national treasuries at the expense of other nations |
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Term
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Definition
| The ability of a nation to produce a good more efficiently than any other nation |
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Term
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Definition
| The trade theory that nations should accumulate financial wealth, usually in the form of gold, by encouraging exports and discouraging imports |
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Term
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Definition
| When a nation's exports are greater than its imports |
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Term
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Definition
| when a nation's imports are greater than its exports |
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Term
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Definition
| When a country is unable to produce a good more efficiently than other nations, but produces the good more efficiently than it does any other good |
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Term
| Factor proportions theory |
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Definition
| countries produce and export goods that require resources that are abundant and import goods that require resources in short supply |
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Term
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Definition
| The paradox that exists between the factor proportions theory and the actual trade flow |
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Term
| international product life cycle theory |
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Definition
| Raymond Vernon's theory that a company will begin by exporting its product, but later, it will undertake foreign direct investment as the product moves through its life cycle; a country's export will eventually become its import. The life cycle will typically go through 3 stages (the new product stage, the maturing product stage, and the standardized product stage) |
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Term
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Definition
| The theory that states 1.) there are gains to be mode from specialization and increasing economies of scale, 2.) the companies first to market can create barriers to entry, 3.) government may play a role in assisting its home companies. This theory is in line with the comparative advantage theory, but at odds with the factor proportions theory. |
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Term
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Definition
| The economic and strategic advantage gained by being the first company to enter an industry |
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Term
| national competitive advantage theory |
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Definition
| Michael Porter's theory that states that a nation's competitiveness in an industry depends on the capacity of the industry to innovate and upgrade. |
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Term
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Definition
| The four elements Porter identifies that present the varying degrees in every nation that form the basis of nation competitiveness. Consists of 1.) factor conditions 2.) demand conditions 3.) related and supporting industries and 4.) firm strategy, structure, and rivalry |
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Term
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Definition
| Those that export products or make investments to compete outside the local area. A small number usually account for a major share of regional economic activity |
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Term
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Definition
| The pattern of imports and exports that occurs in the absence of trade barriers |
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Term
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Definition
| a country's emerging industries need protection from international competition during their development phase until they become sufficiently competitive internationally |
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Term
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Definition
| the policy that companies should earn a good profit if they obtain first-mover advantages and solidify positions in their markets around the world |
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Term
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Definition
| global conglomerates in South Korea that dwarf competitors; an example would be the government subsidies South Korean shipbuilders received to help South Korea emerge from the global economic crisis |
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Term
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Definition
| financial assistance to domestic producers in the form of cash payments, low-interest loans, tax breaks, product price supports, or other forms |
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Term
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Definition
| an option that a government will guarantee that it will repay the loan of a company if the company should default on repayment; used to encourage investment |
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Term
| Export-Import Bank of the United States |
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Definition
| an institution that finances the export activities of companies in the US and offers insurance on foreign accounts receivable |
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Term
| Overseas Private Investment Corporation (OPIC) |
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Definition
| provides insurance insurance services for investors; companies that invest abroad can insure against losses due to expropriation, currency inconvertibility, and war revolution and insurrection |
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Term
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Definition
| a designated geographic region through which merchandise is allowed to pass with lower customs duties and/or fewer customs procedures |
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Term
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Definition
| the result of the creation of a free trade zone along the northern border of Mexico and the united states; these companies import materials/parts from the US duty free, modify them a little, and export them back to the US |
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Term
| General Agreement on tariffs and Trade (GATT) |
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Definition
| a treaty designed to promote free trade by reducing both tariff and nontariff barriers to international trade; formed in 1947 by 23 nations and enacted in January 1948; later revised |
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Term
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Definition
| Modified GATT in several ways; 1.) Agreements on services (cross-border supply, consumption abroad, commercial presence, and presence of natural persons) 2.) agreement on intellectual property (trying to restrict international poverty), 3.) Agreement on agricultural subsidies (addressed the main issues of agricultural tariffs and non tariff barriers) |
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Term
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Definition
| a requirement that WTO members extend the same favorable terms of trade to all members that they extend to any single member |
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Term
| World Trade Organization (WTO) |
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Definition
| one of the greatest achievements of the Uruguay Round; the international organization that currently has 153 members and 31 observers that regulates trade among nations that has three main goals: 1.) to help the free flow of trade 2.) to help negotiate further opening of markets 3.) to settle trade disputes among its members |
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Term
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Definition
| when a company exports a product at a price that is either lower than the price normally charged in its domestic market or lower than the cost of production; WTO settles disputes with dumping |
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Term
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Definition
| an additional tariff placed on an imported product that a nation believes is being dumped on its market |
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Term
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Definition
| an additional tariff placed on an imported product that a nation believes is receiving an unfair subsidy |
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Term
| foreign direct investment (FDI) |
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Definition
| the purchase of physical assets or a significant amount of the ownership (stock) of a company in another country to gain a measure of management control; two main drivers are globalization and international mergers and acquisitions |
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Term
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Definition
| an investment that does not involve obtaining a degree of control in a company |
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Term
| international product life cycle theory |
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Definition
| the theory that states that a company will begin by eporting its product and later undertake foreign direct investment as a product moves through its life cycle |
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Term
| Market imperfections theory |
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Definition
| the theory that states that, when an imperfection in the market makes a transaction less efficient than it could be, a company will undertake foreign direct investment to internalize the transaction and, thereby, remove the imperfection; two market imperfections include trade barriers and specialized knowledge |
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Term
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Definition
| the theory that states that firms undertake direct investment when the features of a particular location combine with ownership and internalization advantages to make a location appealing for investment; applies when location, ownership, and internalization advantages take place |
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Term
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Definition
| the advantage of locating a particular economic activity in a specific location because of the characteristics (natural/acquired) of that location |
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Term
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Definition
| refers to company ownership of some special asset, such as brand recognition, technical knowledge, or management ability |
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Term
| internalization advantage |
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Definition
| an advantage that arises from internalizing a business activity rather than leaving it to a relatively inefficient market |
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Term
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Definition
| the theory that states that a firm tries to establish a dominant market presence in an industry by undertaking foreign direct investment; can be achieved through vertical integration |
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Term
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Definition
| the extension of company activities into stages of production that provide a firm's inputs (backward integration) or absorb its outputs (forward integration) |
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Term
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Definition
| a company's decision to build a subsidiary from the ground up |
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Term
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Definition
| a system of production in which each of a product's components in produced where the cost of producing that component is lowest |
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Term
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Definition
| a national accounting system that records all payments to entities in other countries and all receipts coming into the nation |
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Term
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Definition
| a national account that records transactions involving the import and export of goods and services, income receipts on assets abroad, and income payments on foreign assets inside the country; a surplus means that the country exports more than it imports, a deficit means that the country imports more than it exports |
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Term
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Definition
| a national account that records transactions involving the purchase or sale of assets |
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Term
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Definition
| industries that use outdated an obsolete technologies or employ low-wage workers with few skills; often encourage FDI |
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Term
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Definition
| lowest level of economic integration that is possible between two or more countries; economic intergration whereby countries seek to remove all barriers to trade among themselves, nit each country determines its own barriers against nonmembers (ex: NAFTA) |
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Term
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Definition
| 2nd lowest level of economic integration whereby countries remove all barriers to trade among themselves, but erect a common trade policy against nonmembers |
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Term
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Definition
| 3rd highest level of economic integration whereby countries remove all barriers to trade and the movement of labor and capital among themselves, but erect a common trade policy against nonmembers |
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Term
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Definition
| 2nd highest level of economic integration whereby countries remove barriers to trade and the movement of labor and capital among members, erect a common trade policy against nonmembers, and coordinate their economic policies |
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Term
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Definition
| highest level of economic integration whereby countries coordinate aspects of their economic and political systems (ex: the European Union is currently taking steps to this) |
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Term
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Definition
| the increase in the level of trade between nations that results from regional economic integration |
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Term
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Definition
| the diversion of trade away from nations not belonging to a trading bloc and toward member nations; can actually result in increased trade with a less efficient producer |
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Term
| Single European Act (SEA) |
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Definition
| a commission formed to analyze potential for a common market by the end of 1992 whose goal was to remove remaining barriers, increase harmonization, and thereby enhance the competitiveness of European companies (went into effect in 1987) |
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Term
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Definition
| The treaty that further integrated Europe with three aims: 1.) called for banking in a single, common currency after Jan. 1 1991 and circulation of coins and paper currency on Jan 1 2002 2.) set up monetary and fiscal targets for countries that wished to take part in monetary union 3.) called for political union of the member nations including development of a common foreign and defense policy and common citizenship |
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Term
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Definition
| the European plan that established its own central bank and currency in January 1999 |
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Term
| Maastricht Treaty Economic Criteria |
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Definition
| member nations must comply to the following criteria in order to partake in the euro: 1.) consumer price inflation must be below 3.2 percent and must not exceed that of the three best performing countries by more than 1.5 percent 2.) the gov debt must be 60 percent of GDP or lower 3.) the general gov deficit must be at or below 3 percent of GDP 4.) interest rates on long-term gov securities must not exceed those of the three countries with the lowest inflation rates by more than 2 percent |
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Term
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Definition
| requires each of the countries in the European Union (currently 27) to 1.) have stable institution which guarantee democracy 2.)have a functioning market economy 3.)be able to assume the obligations of membership including adhere to the aims of economic, monetary, and political union, have the ability to adopt rules and regulations of the community, rulings of the European Court of Justice, and the treaties |
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Term
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Definition
| consists of 736 members elected by popular vote within each member nation every 5 years; adopts EU law by debating and amending legislation proposed by the European Commission and exercises political supervision over all EU institutions giving it the power to supervise commissioner appointments and to censure the commission |
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Term
| Council of the European Union |
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Definition
| the legislative body of the EU; brings together representatives of member states at the ministerial level and the makeup changes depending on the topic of discussion; no legislation becomes law unless this body votes it into law |
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Term
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Definition
| the executive body of the EU; it comprises commissioners appointed by each member country (larger nations get 2, smaller nations get 1); member nations appoint the president and commissioners after being approved by the Parliament and this body has the right to draft legislation,is responsible for managing and implementing policy, and monitors member nations' implementation of EU law |
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Term
| European Court of Justice |
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Definition
| the court of appeals of the EU that is composed of 27 judges (one from each member nation) and 8 advocates general who hold renewable six-year terms |
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Term
| European Court of Auditors |
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Definition
| comprises 27 members (one from each member nation) appointed for renewable six-year terms; assigned the duty of auditing the EU accounts and implementing its budget |
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Term
| European Free Trade Association (EFTA) |
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Definition
| a free trade agreement implementing non EU members so they can not join the EU and still receive the benefits of free trade (consists of Iceland, Liechtenstein, Norway, and Switzerland) |
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Term
| European Economic Area (EEA) |
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Definition
| a combination of EFTA and EU created to cooperate on matters such as the free movement of goods, persons, services, and capital among member nations |
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Term
| North American Free Trade Agreement (NAFTA) |
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Definition
| seeks to eliminate all tariffs and nontariff trade barriers on goods origination from within North America; the traded good, however, must meet the criteria of 1.)being wholly produced or obtained in the NAFTA region 2.) containing non-origination inputs, but meeting Annex 401 origin rules 3.)being produced in the NAFTA region wholly from origination materials 4.)being assembled goods and goods classified in the same harmonized system category as their parts that have sufficient regional content |
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Term
| Central American Free Trade Agreement (CAFTA-DR) |
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Definition
| a free trade agreement established in 2006 between the United States and Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic |
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Term
| Latin American Free trade Association (LAFTA) |
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Definition
| Formed in 1961; this agreement was the first attempt at the creation of a free trade area; led to the creation of the Andean Community and the Latin American integration Association |
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Term
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Definition
| a group formed in 1969 that attempts to reduce tariffs for trade among member nations, implement a common external tariff, and implement common policies in transportation and certain industries among the nations of Bolivia, Colombia, Ecuador, and Peru |
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Term
| Latin American Integration Association (ALADI) |
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Definition
| formed in 1980 and consisting of 11 countries; this group calls for the preferential tariff agreements (bilateral agreements) to be made between pairs of member nations that reflect the economic development of each nation...didn't really work and called for the creation of MERCOSUR |
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Term
| Southern Common Market (MERCOSUR) |
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Definition
| a free trade agreement consisting of Argentina, Brazil, Paraguay, Uruguay, and Venezuela that acts as a customs union and boasts a market of more than 266 million consumers and a GDP of around $2.8 trillion, Bolivia, Chile, Colombia, Ecuador, and Peru are associate members and Mexico has observer status in the bloc |
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Term
| The Caribbean Community and Common Marktet (CARICOM) |
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Definition
| a trading bloc formed amongst Caribbean countries in 1973 that has 15 full members, 5 associate members, and 7 observers; main problem is that member countries trade with other nations more than member nations bc they don't have the stuff the other members want |
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Term
| Free Trade Area of the Americas (FTAA) |
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Definition
| an ideal/daunting trading bloc that would extend from the northern tip of North America to the southern tip of South America |
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Term
| Association of Southeast Asian Nations (ASEAN) |
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Definition
| A trading bloc among Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei, Vietnam, Laos and Myanmar, and Cambodia aimed to promote economic, cultural, and social development in the region, safeguard the region's economic and political stability, and serve as a forum in which differences can be resolved fairly and peacefully |
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Term
| Asian Pacific Economic Cooperation (APEC) |
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Definition
| an organization formed in 1989 that now has 21 members and has an aim to strengthen the multilateral trading system and expand the global economy by simplifying and liberalizing trade and investment procedures among member nations; hopes to have free trade/investment by 2020 |
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Term
| Closer Economic Relations Agreement (CER) |
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Definition
| A free trade agreement between Australia and New Zealand that slashed tariffs and quotas by 80 percent by 1980 |
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Term
| Gulf Cooperation Council (GCC) |
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Definition
| a trading bloc created amongst middle eastern nations that evolved into as much of a political entity as an economic one |
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Term
| Economic Community of West African States (ECOWAS) |
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Definition
| the goal of this body is to create a customs union, and eventual common market, and a monetary union amongst west african states; has made little progress due to political instability, poor governance, and poor economic policies |
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Term
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Definition
| A group of 53 nations on the African continent that joined forces (as a result of the Sirte Declaration) to rid the continent of the remaining vestiges of colonialism and apartheid, promote unity and solidarity among African states, coordinate and intensify cooperation for development,safeguard the sovereignty and territorial integrity of members, and promote international cooperation within the framework of the United Nations |
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Term
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Definition
| a system that allocates financial resources in the form of debt and equity accordinf to their most efficient uses; its main purpose is to provide a mechanism through which those who wish to borrow or invest money can do so efficiently |
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Term
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Definition
| consists of loans for which the borrower promises to repay the borrowed amount (the principal) plus a predeteremined rate of interest |
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Term
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Definition
| instruments that specify the timing of principal and interest payments; the holder of this entity can force the borrower into bankruptcy if the borrower fails to pay on a timely basis |
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Term
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Definition
| part ownership of a company in which the equity holder participates with other part owners in the company's financial gains and losses |
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Term
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Definition
| shares of ownership in a companyy's assets that give shareholders a claim on the company's future cash flows; shareholders may be rewarded with dividends |
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Term
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Definition
| a feature of both debt and equity markets; refers to the ease with which bondholders and chaseholders may convert their investments into cash |
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Term
| international capital market |
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Definition
| a network of individuals, companies, financial institutions and governments that invest and borrow across national boundaries; consists of both electronic networkds and formal exchanges |
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Term
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Definition
| the unboundling and repackaging of hard-to-trade financial assets into more liquid, negotiable, and marketable financial instruments (or securities) |
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Term
| offshore financial center |
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Definition
| a country or territory whose financial sector features very few regulations and few, if any, taxes; fall into two categories: operational centers and booking centers |
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Term
| international bond market |
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Definition
| consists of all bonds sold by issuing companies, governments, or other organizations outside their own countries |
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Term
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Definition
| a bond issued outside the country in whose currency it is denominated (example: a bond issued by a venezuelan company, denominated in US dollars and sold in Britain) |
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Term
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Definition
| bonds sold outside the borrower's country and denominated in the currency of the country in which they are sold (ex: a yen-denominated bond issued by a German company and sold in Japan) |
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Term
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Definition
| foreign bonds issued in japan |
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Term
| international equity market |
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Definition
| consists of all stocks bought and sold outside the issuer's home country; four factors are responsible for its growth: 1.) spread of privatization 2.) economic growth in emerging markets 3.) activity of investment banks 4.) advent of cybermarkets |
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Term
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Definition
| rates that the world's largest banks charge one another for loans; determined on the free market |
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Term
| London interbank Offer Rate (LIBOR) |
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Definition
| the interest rate that London banks charge other large banks that borrow Eurocurrency |
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Term
| London Interbank Bid Rate (LIBID) |
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Definition
| the interest rate offered by London banks to large incestors for Eurocurrency deposits |
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Term
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Definition
| a market in which currencies are bought and sold and their prices are determined |
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Term
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Definition
| the rate at which one currency is exchanged for another |
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Term
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Definition
| the price at which the bank will buy currency |
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Term
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Definition
| the price at which banks will sell currency |
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Term
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Definition
| the practice of insuring against potential losses that result from adverse changes in exchange rates; international companies use this for two main reasons 1.) to lessen the risk associated with international transfers of funds 2.)to protect themselves in credit ransactions in which there is a time lag between billing and receipt of payment |
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Term
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Definition
| the instantaneous purchase and sale of a currency in different markets for profit |
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Term
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Definition
| the profit-motivated purchase and sale of interest paying securities denominated in different currencies; companies use this to find better interest rates abroad than those that are available in their home countries |
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Term
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Definition
| the purchase or sale of a currency with the expectation that its value will change and generate a profit |
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Term
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Definition
| the rate over the base currency; the numerator |
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Term
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Definition
| the quoted currency over the rate; the denominator |
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Term
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Definition
| ex: when we say it costs 84 yen to buy one dollar, the yen is the....on the yen |
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Term
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Definition
| ex: when we say it costs 84 yen to buy a dollar, the dollar is the....on the dollar |
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Term
| exchange-rate risk (foreign exchange risk) |
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Definition
| the risk of adverse changes in exchange rates |
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Term
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Definition
| an exchange rate calculated using two other exchange rates (ex: it costs .78 euros to buy a dollar and 84 yen to buy a dollar so you can take .78/84 to get euro per yen) |
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Term
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Definition
| exchange rates that require delivery of the traded currency within two business days |
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Term
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Definition
| the market for currency transactions at spot rates; assists in performming any one of three functions: 1.) converting income generated from sales abroad into their home-country currency 2.)converting funds into the currency of an international supplier 3.) converting funds into the currencu of a country in which they wish to invest |
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Term
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Definition
| an exchange rate at which two parties agree to exchange currencies on a specified future date |
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Term
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Definition
| market for currency transactions at forward rates |
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Term
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Definition
| a contract that requires the exchange of an agreed-upon amount of a currency on an agreed-upon date at a specific exchange rate |
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Term
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Definition
| instruments whose values derive from other commodities or financial instruments; ex: currency swaps, forward contracts, options, and futures |
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Term
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Definition
| the simultaneous purchase and sale of foreign exchange for two different dates (ex: a swedish carmaker imports parts from Turkey and pays lira for the parts when they are delivered the next day, at the same time, the company agrees to receive lira for cars sold in 90 days, so Sweden agrees to get kronor for lira on the spot market today and agrees to a forward contract for the forward rate of a lira in 90 days) |
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Term
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Definition
| an option to exhange a specific amount of a currency on a specific date at a specific rate |
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Term
| currency futures contract |
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Definition
| a contract requiring the exchange of a specific amount of currency on a specific date at a specific exchange rate with all conditions fixed and not adjustable |
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Term
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Definition
| a currency used as an intermediary to convert funds between two other currencies (most common are the US dollar, the British pound, the euro, and the Japanese yen) |
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Term
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Definition
| the world's largest banks exchange currency at spot and forward rates in this market |
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Term
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Definition
| the process of aggregating the currencies that one bank owes another and then carrying out that transaction |
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Term
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Definition
| specialize in currency futures and options transactions; buying and selling currencies on these exchanges entails the use of securities brokers who facilitate transactions by transmitting and executing clients' orders |
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Term
| over-the-counter market (OTC market) |
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Definition
| a decentralized exchange encompassing a global computer network of foreign exchange traders and other market participants |
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Term
| convertible (hard) currency |
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Definition
| a currency traded freely in the foreign exchange market, its price is determined by the forces of supply and demand; countries that allow full convertibility are those that are in strong financial positions and have adequate reserves of foreign currencies |
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Term
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Definition
| blocs on currency; have four main goals: 1.) to preserve a country's reserve of hard currencies with which to repay debts 2.) to preserve hard currencies to pay for imports and to finance trade deficits 3.) to protect a currency from speculators 4.) to keep resident individuals and businesses from investing in other nations |
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Term
| import deposit requirements |
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Definition
| a requirement for businesses to deposit certain percentages of their foreign exchange funds in special accounts before being granted import licenses |
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Term
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Definition
| limit the amount of foreign currency that residents can take out of the home country when traceling to other countries as tourists, students, or medical patients |
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Term
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Definition
| the practice of selling goods or services that are paid for, in whole or in part, with other goods or services (ex: barter) |
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Term
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Definition
| the intential lowering of the value of a currency by the nation's gov |
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Term
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Definition
| the intentional raising of a currency's value by the nation's gov |
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Term
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Definition
| tells us what the exchange rate should be; stipulates that an identical product must have an identical price in all countries when the price is expressed in a common currency |
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Term
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Definition
| the relative ability of two countries' currencies to buy the same "basket" of goods in those two countries |
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Term
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Definition
| refers to the activities that directly affect a nation's interest rates or money supply because investors pay money to the gov's treasury to acquire the securities |
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Term
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Definition
| involves using taxes and gov spending to influence the money supply indirectly |
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Term
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Definition
| the principle that the nominal interest rate is the sum of the real interest rate and the expected rate of inflation over a specific period (nominal interest rate= real interest rate + inflation rate) |
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Term
| international fisher effect |
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Definition
| the principle that a difference in nominal interest rates supported by two countries' currencies will cause an equal, but opposite change in their spot exchange rates |
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Term
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Definition
| holds that prices of financial instruments reflect all publicly abailable info at any given time and that forward exchange rates are accurate forecasts of future exchange rates |
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Term
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Definition
| reflects a market's expectations about the future values of two currencies |
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Term
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Definition
| holds that prices of financial instruments do not reflect all publicly available info bc the cost of searching for new info may not outweigh the benefit of discovery |
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Term
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Definition
| uses statistical models based on fundamental economic indicators to forecast exchange rates |
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Term
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Definition
| a technique that uses charts of past trends in currency prices and other factors to forecast exchange rates |
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Term
| international monetary system |
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Definition
| the collection of agreements and institutions that govern exchange rates |
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Term
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Definition
| an international monetary sustem in which nations linked the value of their paper currencies to specific values of gold |
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Term
| fixed exchange rate system |
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Definition
| when the exchange rate for converting one currency into another is fixed by international governmental agreement |
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Term
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Definition
| an accord among nations to create a new international monetary system on the value of the US dollar, the new system was designed to balance the strict discipline of the gold standard with the flexibility that countries needed to deal with temporary domestic monetary difficulties |
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Term
| fundamental disequilibrium |
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Definition
| an economic condition in which a trade deficit causes a permanent negative shift in a country's balance of payments |
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Term
| World Bank (officially called the International Bank for Reconstruction and development or IBRD) |
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Definition
| an entity created by the Bretton Woods Agreement that provided funding for countries' efforts toward economic development and whose main purpose was to finance European reconstruction following the Second World War (later shifted to the needs of developing countries) |
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Term
| International Monetary Fund (IMF) |
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Definition
| the agency created by the Bretton Woods Agreement to regulate the fixed exchange rates and enforce the rules of the itnernational monetary system; has 185 members today |
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Term
| special drawing right (SDR) |
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Definition
| an IMF asset whose balue is based on a weighted "basket" of four currencies (US dollar, European Union euro, Japanese yen, British pound) |
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Term
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Definition
| created to restructure and strengthen the international monetary system; three main accomplishments: 1.) to lower the value of the dollar in terms of gold to $38/oz 2.) to increase the values of other countries' currencies against the dollar, and 3.) to increase to 2.25 percent from 1 percent the band within which currencies were allowed to float |
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Term
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Definition
| an accord among members of the IMF to formalize the existing sustem of floating exchange rates as the new international monetary system |
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Term
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Definition
| endorsed by the Jamaica agreement, a system in which currencies float against one another, with govs intervening to stabilize their currencies at particular target exchange rates |
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Term
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Definition
| a system in which currencies float freely against one another without govs intervening in currency markets (contrast to a managed float system) |
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Term
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Definition
| an agreement in 1985 among the g5 nations to act together in forcing down the value of the US dollar; caused traders to sell the dollar and its value fell |
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Definition
| France, Germany, United States, Japan, and the United Kingdom |
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Term
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Definition
| Germany, United States, the United Kingdom, Japan, France, Canada, and Italy |
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Term
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Definition
| a 1987 agreement among the G7 nations that affirmed that the US dollar was appropriately valued and that they would intervene in currency markets to maintain its currenct market value |
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Term
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Definition
| a monetary regime that is based on an explicit commitment to exchange domestic currency for a specified foreign currency at a fixed exchange rate |
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Term
| European Monetary System (EMS) |
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Definition
| established to help stabilize exchange rates, promote trade among nations, and keep inflation low through monetary discipline; phased out when the EU adopted a single currency |
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Term
| exchange rate mechanism (ERM) |
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Definition
| limited the fluctuations of European Union members' currencies within a specified trading range; members were required to keep their currencies within 2.25 percent of the highest and lowest-valued currencies |
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Term
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Definition
| seeks to support nations that seek future membership in the European monetary union by linking their currencies to the euro (only Denmark participates today) |
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