Match each of the terms on the left with its definition on the right. Click on the term first and then click on the matching definition. As you match them correctly they will move to the bottom of the activity.
Balance of payments accounts Balance of payments on current account (current account) Balance of payments on goods and services Merchandise trade balance (trade balance) Balance of payments on financial account (financial account) Foreign exchange market Exchange rates Appreciation Depreciation Equilibrium exchange rate Real exchange rate Purchasing power parity Exchange rate regime Fixed exchange rate Floating exchange rate Exchange market intervention Foreign exchange reserves Foreign exchange controls Devaluation Revaluation | a rule governing policy toward the exchange rate. the price at which currencies trade, determined by the foreign exchange market. the exchange rate at which the quantity of a currency demanded in the foreign exchange market is equal to the quantity supplied. a reduction in the value of a currency that is set under a fixed exchange rate regime. (between two countries’ currencies) the nominal exchange rate at which a given basket of goods and services would cost the same amount in each country. a summary of a country’s transactions with other countries, including two main elements: the balance of payments on current account and the balance of payments on financial account. the exchange rate adjusted for international differences in aggregate price levels. the difference between the value of exports and the value of imports during a given period. an exchange rate regime in which the government lets market forces determine the exchange rate. transactions that don’t create liabilities; a country’s balance of payments on goods and services plus net international transfer payments and factor income. stocks of foreign currency that governments can use to buy their own currency on the foreign exchange market. the market in which currencies can be exchanged for each other. an increase in the value of a currency that is set under a fixed exchange rate regime. international transactions that involve the sale or purchase of assets, and therefore create future liabilities. government purchases or sales of currency in the foreign exchange market. a rise in the value of one currency in terms of other currencies. a fall in the value of one currency in terms of other currencies. an exchange rate regime in which the government keeps the exchange rate against some other currency at or near a particular target. the difference between a country’s exports and imports of goods alone—not including services. licensing systems that limit the right of individuals to buy foreign currency. |