Terminology Flashcards
(9 cards)
1
Q
Net Foreign Asset Position
A
Assets owned abroad - Liabilities to foreigners
2
Q
Current account (CA)
A
- exchange of goods and services
3
Q
Financial account (FA)
A
- actual transaction occurs
- consists of value of goods and services
4
Q
Capital account (KA)
A
- very small and detailed
-> property rights, debts etc.
5
Q
Debit
A
payment out of country (exports)
6
Q
Credit
A
payment into country (imports)
7
Q
Balance of Payments
A
CA – FA – KA = BoP = 0
8
Q
Uncovered interest parity
A
describes relationship between:
- return on safe assets at home vs abroad
- exchange rate current vs future
9
Q
Monetary policy dilemma
A
it’s never possible for central banks to have…
1. fixed exchange rate
2. freedom of financial flows
3. monetary policy autonomy
…all at once
