12 terms

AP Econ Quiz

foreign exchange market
what currencies are traded in
exchange rate
price at which currencies trade are known as
when currency becomes more valuable in terms of other currencies
when a currency becomes less valueable 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 quatity supplied
Real exchange rate
exchange rates adjusted for international differences in aggregate price levels
purchasing power parity
between two countries' currencies is the nominal exchange rate at which a given basket of goods and services would cost the same amont in each country
balance of payments
summary of the country's transactions with other countries
current account
a country's balance of payments on goods and services plus net international transfer payment and factor income
balance of payments on goods and services
the difference between its exports and its imports during a given point
trade balance
the difference between a country's exports and imports of goods; does not included services
financial account
transactions that involve the sale or purchase of assets and theredore do create liabilities