Discovery Unit 28 Glossary Flashcards Preview

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Flashcards in Discovery Unit 28 Glossary Deck (15):
1

dollarize

Refers to countries adopting the U.S. dollar as their currency.

2

foreign exchange market

Market in which people or firms use one currency to purchase another currency.

3

foreign direct investment

Form of financial investment that crosses international boundaries, and thus requires an exchange of currency. Refers to purchases of firms in another country that involve the taking of a management responsibility.

4

portfolio investment

Form of financial investment that crosses international boundaries, and thus requires an exchange of currency. Refers to a purely financial investment that does not involve any management responsibility.

5

appreciating

Occurs when the exchange rate for a currency rises so that the currency trades for more of other currencies.

6

depreciating

Occurs when the exchange rate for a currency is falling so that the currency trades for less of other currencies.

7

real exchange rates

Exchange rates adjusted for international differences in aggregate price levels.

8

Arbitrage

Act of buying low in one market and selling high in another market.

9

purchasing power parity

Exchange rate that equalizes the prices of internationally traded goods across countries.

10

balance of payments

Broad concept used to monitor all international monetary transactions during a given time period.

11

balance of trade

Refers to the balance between imports and exports of goods and services during the same time period.

12

current account

Transaction related to the balance of payments. Export and import of goods and services as well as any international earnings on investments, both public and private.

13

capital account

Transaction related to the balance of payments. Recording of all international purchases and sales of stocks, bonds, real estate, businesses, and bank accounts.

14

official reserve account

Transaction related to the balance of payments. Records all purchases and sales of international reserve assets such as dollars, foreign exchanges, gold, and special drawing rights (SDRs) by a nationメs central bank.

15

special drawing rights

Created by the International Monetary Fund, this is a form of international reserve asset intended to supplement member countriesメ official reserves. A
basket of international currencies determines the value of the special drawing rights.