Show:
Current Account
Miscellaneous
Appreciation/Deprecitation/Interest Rates
BOP
FOREX
100

What is trade in goods deficit?

When import value of goods exceeds export value of goods

100

I'm 10 letter word

Who am I?

R________E

Remittance

100
What is appreciation
An increase in the value of a currency
100

Identify the components of a country’s balance of payments

Capital Account 

Current Account 

Financial account

100

What are the labels to the foreign exchange graph

X and Y axis

What is quantity of currency demanded or supplied on the x-axis 

and 

exchange rate/ price of the currency on the y axis

200

Define balance of trade

The net difference between import and export value of goods and services

200

When a foreign company buys a business in a different country it is known as

Foreign Direct Investment

200
What is depreciation
A decrease in the value of a currency
200

Explain a balance of payment deficit

payments are greater than receipts

or

Outflow of money exceeds inflow of money

200

Draw graph and label 

The effect of an increase in the supply of currency

Supply shifts to right leading to fall in ER/price

300
What is net foreign income
The difference between the aggregate amount that a country's citizens and companies earn abroad, and the aggregate amount that foreign citizens and overseas companies earn in that country.
300

Types of Exchange rate systems

Floating ER

Fixed ER

Managed ER

300
What is the effect on net exports if currency appreciates?
Net exports decline
300

Define BOP

A country’s balance of payments is a record of all the economic transactions between residents of that country and residents in other countries

300

Draw a graph and label

The effect on the value of the dollar of Americans buying fewer UK products

Supply curve shift to left leading to ER rise

The figure must show an appreciation in the value of the US dollar. This might have been caused by a fall in the American demand for UK imports. If Americans are buying fewer UK imports, they will need to sell fewer dollars to purchase pounds sterling.

400

list any 4 debit items example. (from different components of Current account).

Import of any goods

Import of any services

Paid dividend, rent etc

donation to other country


400

Define floating exchange rate system

A floating exchange rate is one determined by market forces. Currencies are bought and sold on the foreign exchange market. No Government intervention

400

How will higher real interest rates affect the demand for a country's currency?

Demand will increase due to hot money flows/investment opportunities

400

Money coming into the country creates ______ items, which have a _____sign. Money going out of the country gives rise to _______ items and is recorded with a _______ sign

Money coming into the country creates credit items, which have a positive sign. Money going out of the country gives rise to debit items and is recorded with a negative sign

400
What would happen to the U.S dollar if Europeans prefer vacationing in the U.S? What would happen to the Euro
What is U.S dollar appreciates and demand increases and the Euro depreciates and supply decreases
500
Gloria sends $500 to her family in Colombia. How does this affect the US Current Account?
Current Account decreases by $500
500

The currency will be sold to buy imports, to invest abroad, and in the expectation that the value of the currency will ____ in the future

The currency will be sold to buy imports, to invest abroad, and in the expectation that the value of the currency will fall in the future

500
What will happen to the value of a currency if real interest rates rise?
Currency will appreciate
500

MCQ - Q) Which of the following would be a credit item in the balance of payments?

A) An Australian tourist’s spending while on holiday in Singapore

B) An Australian firm fires a non-resident Indonesian citizen

C) An Australian firm invests overseas

D) An Australian firm sells computer software overseas

D

500

$1 equals how much of a Euro

1$= Euro 0.94