Exam 4: The International Flow of Funds and Exchange Rates

The forex market consists of spot, forward, and _____ markets.

____ float currency is a monetary system with minimal government intervention; largely market determined.

Of the following, which is NOT an example of a foreign direct investment?​

Identify the four subaccounts of the current account and give specific examples of each.

A British firm may need dollars to pay for U.S. imports. It can work with banks in London to exchange pounds for dollars to make this payment via electronic transfer. This is an example of a(n)_____ market.

What is dollarization?

The _____ market is an informal OTC market run by banks.

The _____ account consists of domestic-country-owned assets abroad, foreign-owned assets in the domestic country, and net financial derivatives.

In the equation "F=S(1+P)," "F" is defined as what?

Security investments have little impact on the BOP's financial account.

Scenario - S & I Creations Sven and Ingrid Allgertson developed the idea for their thriving business while awaiting the birth of their first child, Olga.  Finding nowhere to purchase fine handmade baby clothing and other items, the couple decided to start their own business.  Neither Sven nor Ingrid imagined just how successful this endeavor would turn out to be for them. Their designer baby clothes and products were an instant hit in the world marketplace.  And even though the baby items are quite expensive to purchase, shoppers from around the world are only too happy to spend large sums of money on their beloved children. Originally S & I Creations only sold products within Sweden, but soon global demand necessitated the company offer its products in several other foreign markets.  Now the proud parents of baby Olga are also the proud owners of a $10 billion per year business.  Sven and Ingrid cannot wait to see what the future holds for their family and their business operations. S & I Creations has over ten thousand customers from London, England.  The currency of England is not valued the same as the currency of Sweden. Which one of the following would S & I Creations be most interested in when it comes to currency value?  

Which of the following rose substantially in value against most other currencies as well as served as a reserve asset in many countries during the global economic and financial crises of 2008-2009?

The difference between bid and ask prices of a currency, or the fee earned by the bank is called the _____.

A _______ occurs when merchandise imports exceed merchandise exports for a country.

Describe the different components of a forex market.

According to the income balance, the "+" sign refers to _____ and the "-" sign refers to _____.

According to the text, _____ countries' exports are growing the fastest.

The _____ reconciles any imbalance between the current account and financial account to ensure that all debit and credit entries in the balance of payments statement sum to zero.

Explain why the United States abandoned the gold system.

The International Monetary Fund (IMF)was established under the Bretton Woods Agreement to help ensure the stability of the international monetary and financial system.