Terms : Hide Images
| 6624062118 | Floating Exchange Rates | Demand and supply forces determine exchange rates w/ minimal gov intervention | 0 | |
| 6624062119 | When one country's currency appreciates | Some foreign currencies depreciate relative to it | 1 | |
| 6624062120 | exchange rates are always _______, there is no _________ _______ | relative, absolute value | 2 | |
| 6624062121 | Determinants of Exchange Rates | TIPIS Taste Changes Income Changes Price Level Changes Interest Rate Changes Speculation | 3 | |
| 6624062122 | Change in Tastes Example: American phones become more attractive to Peruvian consumers. | Demand for USD increases while supply for Soles increases | 4 | |
| 6624062123 | Change in Relative Income Example: People in India start to receive more income and buy more items from Spain. | Demand for pesos increases while supply for rupees increases | 5 | |
| 6624062124 | Changes in Price Level Example: Prices in United States become more expensive relative to the prices in India. | Demand for rupees increases while supply of USD increases | 6 | |
| 6624062125 | Change in Interest Rates Example: Interest rates in Britain increase relative to interest rates in the United States. | Demand for pounds increases while supply of USD increases. | 7 | |
| 6624062126 | Why do people store their money where there are higher interest rates? | When people store their money in banks where the interest rate is higher, their currency appreciates. | 8 | |
| 6624062127 | Changes in Speculation Example: American Investors believe the value of the Mexican Peso will appreciate. | Demand for peso increases while supply for USD increases. | 9 | |
| 6624062128 | Foreign Exchange Market | Where National Currencies are exchanged | 10 | |
| 6624062129 | What happens to a country's imports and exports when their currency appreciates? | Imports will increase because it will be cheaper for American consumers. Exports will decrease because it will be more expensive for Foreign consumers. | 11 | |
| 6624062130 | Opportunity Cost Sweaters | mittens/sweaters= X mittens | 12 | |
| 6624062131 | Opportunity Cost Mittens | sweaters/mittens= Y sweaters | 13 | |
| 6624062132 | Absolute Advantage | A country's ability to produce more of a good than another country using the same amount of resources | 14 | |
| 6624062133 | Comparative Advantage | When a country can produce a good/service at a lower opportunity cost than another country | 15 | |
| 6624062134 | Should countries produce goods than they have absolute or comparative advantage? | Comparative Advantage | 16 | |
| 6624062135 | Input Method in determining Comparative Advantage | Table will indicate the input required to produce products. Put 1 over the amount of input. | 17 | |
| 6624062136 | Output Problem | # of product per unit of input | 18 | |
| 6624062137 | Input Problem | # of input per unit of product | 19 | |
| 6624062138 | Balance of Payments | Sum of all transactions between your country and all other countries | 20 | |
| 6624062139 | What is included in balance of payments | Net exports, tourist expenditures, interest and dividends received/paid abroad, purchases and sales abroad | 21 | |
| 6624062140 | Balance of payments is calculated based on | Exchange rates | 22 | |
| 6624062141 | Current account | Items cross borders, goods and services, interest, dividends, and profits paid over borders, gifts | 23 | |
| 6624062142 | Capital account | Stays in country, stocks, bonds, plant and equipment purchases, official reserves | 24 | |
| 6624062143 | Official Reserves | Banks' holdings of foreign currency, used to make balance of payments $0 | 25 |
