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what is balance of payments?
A record of the economic transactions b/w the residents of one country and the rest of the world.
What is a current account?
the monetary value of the international flows associated with transactions in goods, services, income flows, and unilateral transfers.
What are official settlements transactions?
the movement of financial assets among official holders pg 342
what are official reserve assets?
holding key foreign currencies, special drawing rights, and reserve positions in the IMF by official monetary institutions
What is the Foreign Exchange Market?
market where foreign exchanges are traded.
What is depreciation?
When it takes more units of a country;s currency to to purchase a unit of some foreign currency
What is appreciation?
When it takes fewer units of a nations currency to purchase a unit of some foreign currency.
What is cross exchange rate?
The rates of two currencies as expressed ina third currency
What is the forward market?
made by those who will receive or make payments in foreign exchange in the weeks or months ahead.
what is hegding?
The process of avoiding or covering a foreign exchange risk
What is covered interest arbitrage?
process of moving funds into foreign currencies to take advantage of higher investment yields abroad while avoiding risk.
What is the law of one price?
idea that identical goods should cost the same in all nations assuming it is costless to ship goods, and there are no trade barriers.
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