Exam 4: The International Flow of Funds and Exchange Rates

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

Together, the dollar, euro, and yen account for around 60 percent of the world economy.

Prices of a foreign currency in (for example)dollars, or the number of dollars per foreign currency refers to ______.

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

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

Differentiate between hard and soft currencies. Provide an example of each.

_______ refers to the system that pegs the value of a country's currency at a fixed rate to a major currency or basket of currencies, while the exchange rate fluctuates within a narrow margin around a central rate.

According to the Big Mac Index, the dollar interest rate on U.S. and European bonds should be the same. Otherwise, there would be no arbitrage opportunities for investors.