EC2008 X2 Flashcards
what is national income?
It is the value of all final goods and services produced by using the production factors of a nation in a given time period.
what are the 3 broad accounts that separate the balance of payments?
current account
financial account
capital account
what is the central bank
it is the institution responsible for managing the supply of money
how do central banks affect macroeconomic conditions in their economies?
by buying or selling reserves in private asset markets
what does the balance of payments record?
it records the flows of goods and services and flows of financial assets across countries
what is exchange rates
the foreign currency per unit of domestic currency
what is depriciation
it is a decrease in the value of a currency relative to another currency
what is appreciation
it is an increase in the value of a currency relative to another currency
Foreign Exchange markets
are defined as markets where foreign currencies and other assets are exchanged for domestic ones
what are spot rates?
they are exchange rates for currency exchanges “on the sport”
what are forward rates?
they are exchange rates for currency exchanges that will occur in the future
what is the international capital markets?
they are a group of markets that trade different types of financial and physical assets
what is the theory of portfolio diversification
is describes the gains that can be achieved by investing in assets with different type of risk and returns
how can assets be classified
debt instruments
equity instruments
what is offshore banking
it refers to banking outside of the boundaries of a country
