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What is the term used to describe the international financial transactions?
foreign exchange intervention. an international financial transaction in which a central bank buys or sells currency to influence foreign exchange rates. devaluation.
What is the primary difference between international trade transactions and international asset transactions quizlet?
Trade transactions involve goods and services, while asset transactions involve the transfer of property rights. In a given year, if U.S. exports total $2.5 billion and U.S. imports total $3.5 billion, what is the balance of trade on goods for that year?
Which of the following appears as a positive item on the balance of payments accounts for the United States?
ECON Chapter 21 Flashcards | Quizlet.
Which of the following is an implication of large US trade deficits?
Two of the implications of large U.S. trade deficits for the United States are: increased current consumption and increased indebtedness to foreigners. The world’s largest debtor nation in terms of debt owed to foreign citizens and governments is: the United States.
25Student: ___________________________________________________________________________1.International transactions fall into what two broad categories? A. Manufacturing trade and services trade.B. International trade and international asset transactions.C. Currency transactions and services trade.D. Newly created assets and preexisting assets.
The balance of payments (BOP),also known as the balance of international payments, is a statement of all transactions made between entities inonecountry and the rest of the worldover a defined period, such as a quarter or a year. It summarizes all transactions thata country’s individuals, companies, and government bodies complete with individuals, companies, and government bodiesoutside the country.
The capital account, broadly defined, includes transactions in financial instruments and central bank reserves . This situation is often referred to as a balance of payments deficit, using the narrow definition of the capital account that excludes central bank reserves. The sum of all transactions recorded in the balance of payments must be zero, as long as the capital account is defined broadly. Before the 19th century, international transactions were denominated in gold, providing little flexibility for countries experiencing trade deficits. The industrial revolution increased international economic integration, and balance of payment crises began to occur more frequently. As the U.S. money supply increased and its trade deficit deepened, however, the government became unable to fully redeem foreign central banks’ dollar reserves for gold, and the system was abandoned. Since the Nixon shock —as the end of the dollar’s convertibility to gold is known—currencies have floated freely, meaning that country experiencing a trade deficit can artificially depress its currency—by hoarding foreign reserves, for example—making its products more attractive and increasing its exports. Due to the increased mobility of capital across borders, balance-of-payments crises sometimes occur, causing sharp currency devaluations such as the ones that struck in Southeast Asian countries in 1998. All of the world’s major central banks responded to the financial crisis at the time by executing dramatically expansionary monetary policy.