Review
What is absolute advantage?
A party’s ability to produce more goods than a competitor using the same amount of input(s).
What is Specialization
A method of production when an entity focuses on the production of a single product.
What is an exchange rate?
The price of one currency in terms of another.
What is the spot rate?
The immediate exchange rate or "price" at which on the spot deals can be made to be executed today.
What is the bestselling book of all time?
The bible (according to Guinness World Records)
What is comparative advantage?
A country has a comparative advantage at producing something if it can produce it at a lower cost than anyone else.
What is globalization?
trade and technology created the world to be more interconnected.
What does balance of trade mean?
Difference between the countries value of exports and imports.
What is the forward rate?
The rate to be used for a future transaction. It is uninfluenced by whatever spot rate actually comes to pass on the agreed upon date.
Where does the statue of liberty originate?
France (It was also originally copper!)
What is a Tariff?
A tax on a trade.
A Nation with increasing opportunity costs to production will have this type of PPF, and specialize in what way?
Convex(curved), partial
What three levels do Foreign Exchange Markets function on?
1. Transactions between commercial banks and customers
2. Interbank transactions through brokers
3. Active trading in foreign exchange with foreign banks
What is the forward rate called when it is above the spot rate?
The forward premium
What was the first YouTube video to reach a billion views (2012)
Gangnam Style
Who created absolute advantage and comparative advantage idea?
Adam Smith
What is the World trade Organization?
Only global international organization that deals with the rules of trade between nations.
If the exchange rate is given in home per foreign, and the exchange rate has changed from $0.93 per pound to $1.23 per pound, has the US dollar appreciated or depreciated?
Depreciated. It now costs more US dollars to buy 1 British pound. The dollar is worth less.
Describe a currency swap.
An agreement to convert one currency to another at one point in time and reconvert it back to original
currency at specified time in future at a predetermined rate.
Who was the first to circumnavigate the world?
Magellan
What is direct foreign investment?
An ownership stake in a foreign company or project made by an investor, company, or government.
In what year did the WTO start?
1995
If the yen to pound exchange rate is 20Yen, and the dollar to pound exchange rate is $1.25, what is the yen to dollar exchange rate?
The cross rate is 16Yen per 1 dollar.
What is a currency option and what two types are there?
It is a right to buy or sell a fixed amount of foreign currency at a predetermined price within a specified period. The two types are call options and put options.
Who first played the version of chess that is closest to what we play today?
Vikings in the 10th century