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Global Economics (Chap. 1) (Fixed Exchange Rates: currency value is fixed…
Global Economics (Chap. 1)
Fixed Exchange Rates: currency value is fixed against another currency
-aka pegged
-ex) China's exchange rate w the US
Floating Exchange Rates: currency price is set by supply and demand
Exchange Rate Crisis: sudden loss of value of one currency against another
Income: money received on a regular basis through work or investments
Expenditure: amount of money spent
Deficit: more liabilities than assets
Surplus: more assets than liabilites
World as a whole is a closed economy - cannot run on a deficit
Advance Countries: high levels of income, well integrated in the global economy
Emerging Markets: middle-income, growing and gradually becoming more integrated
Developing Countries: low-income countries that are not integrated
Common Currency: peg exchange rates to keep value of currency at a certain level
Dollarization: alleging a country's currency with the US $
Governments have a huge impact on economic prosperity
Corrupt countries will not have strong income per capita
Factors such as colonization, legal does, and resources all play a role
Poor governance = poor country
Overall key points from Chap 1
Exchange Rate: price at which currencies trade
Current account (sum of balance of trade, net income from abroad, and net current transfers) affects a country's overall wealth, credits/debits, and future changes
Focus on how different policies work in different countries