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Foreign Exchange
currenty and bank deposits that are denominated in foreign money
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Foreign Exchange Market
gobal market in which people trade once currency for another
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Exchange Rate
price of one country's money in terms of another country's money
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Appreciation
- When a currency rises in value in relation to another currency
- as a country's currency appreciates, int'l demand for its product falls
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Depreciation
- when a currency falls in value in relation to another currency
- as a country's currency depreciates, goods sell for lower prices in other countries & demand increases
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Balance of Payments
a record of a country's trade in goods, services, and financial assets with the rest of the world
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Double-entry Bookkeeping
a systems of accounting in which every transaction is recorded in a least 2 accounts
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Current Account
sum of the merchandise, services, income and unilateral transfers accounts in the balance of payments
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Surplus vs. Deficit
- Surplus = amount by which credits exceed debits
- Deficit = amount by which debits exceed credits
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Balance of Trade
balance in the merchandise account in a nation's balance of payments
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Financial Account
record in the balance of payments of the flow of financial assets into and out of a country
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