Exam 4: The International Flow of Funds and Exchange Rates

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

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

The net of investment income from abroad and investment payments to foreigners is called the _____.

In this system,a currency's value depends partly upon active government intervention in the foreign exchange market.

An example of inflation is,if the amount of money in a country doubled,but the production of goods and services stayed the same,the price of all goods and services would decline by about half,assuming that other factors,such as external trade,were constant.

The financial account of the BOP consists of three subaccounts: (1)U.S.-owned assets abroad, (2)foreign-owned assets in the U.S.,and (3)_____.

The three largest foreign exchange markets are in London,New York,and _____.

Scenario - The Whoppler Firm The Whoppler Firm is an experienced financial specialist firm that advises thousands of clients regarding foreign investments and transactions.It takes pride in the accuracy of the financial advice that is provided to its clients and strives to increase the wealth of each participant.According to the records of the Whoppler Firm,the financial expertise of the company has saved its clients over five million dollars in the last year alone. -One of the many factors closely watched by the Whoppler Firm is currency values.This firm understands these values can change frequently and quickly.Which one of the following is least likely to be a cause for a currency value to change?

Insurance that reduces future risk is referred to as a(n)_______.

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

Of the following,which is NOT a key principle of the Jamaica Agreement?

_____ refers to the added return required by investors for risk associated with a security or asset.

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

The ______ is the net of merchandise exports and merchandise imports.

The system in which the country pegs its 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 is called a(n)_____.

Indirect quotes give the number of dollars per one unit of foreign currency.

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

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

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 is most likely to use which of the following for converting the currency they are paid in from the foreign countries to the currency of Sweden?

An increase in the prices of goods and services caused by the supply of money exceeding the demand for goods and services is refered to as ______.