International Trade and Money summary Questions and Answers 2026 (2pages)

Balance of Payments Accounts - -summary of the country's transactions with other countries

-Current Account - -balance of payments on goods and services plus net international transfer payments and factor income

-Balance of Payments on Goods and Services - -the difference between exports and imports in a given period

-Trade Balance - -the difference between country's exports and imports of goods

-Financial Account - -the difference between its sales of assets to foreigners and its purchases of assets from foreigners during a given period

-Foreign Exchange Market - -currencies are traded

-Exchange Rates - -prices at which currencies trade

-Appreciates - -when a currency becomes more valuable in terms of other currencies

-Depreciates - -when a currency becomes less valuable in terms of other currencies

-Equilibrium Exchange Rate - -the exchange rate at which the quantity of a currency demanded in the foreign exchange market is equal to the quantity supplied

-Real Exchange Rates - -exchange rates adjusted for international differences in aggregate price levels

-Purchasing Power Parity - -the nominal exchange rate at which a given basket of goods and services would cost the same amount in each country

-Exchange Rate Regime - -a rule of governing policy toward the exchange rate

-Fixed Exchange Rate - -government keeps the exchange rate against some other currency or near a particular target

-Floating Exchange Rate - -governments lets the exchange rate go wherever the market takes it

-Exchange Market Intervention - -government purchases or sales of currency in the foreign exchange market constitute

-Foreign Exchange Reserves - -stocks of foreign currency that governments maintain to buy their own currency on the foreign exchange market