AP Macroeconomics International Trade Flashcards

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