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Ch.4 The Monetary System and the International Arena - Coggle Diagram
Ch.4 The Monetary System and the International Arena
International Transactons
Convert domestic money into
foreign money in order to take place.
Not limited to exchange of goods/services...
include flows of capital from investing.
Balance of Payments
Summary of all transactions
between a country and the world.
Main Uses: Demand and supply of foreign exchange
Current and Capital Accounts
Current records
involving goods and services
Capital records short-term and long-term assets
Current: banking, tourism, transport, insurance
Capital: land, buildings, borrowing and lending
The Foreign Exchange Market
Where national currencies are bought and sold
Exchange rate: price of one nations
currency in terms of another
Percentage Change Formula
Exchange Rates in Business Context
Role of the Dollar Exchange Rate
The International Monetary System
network effecting international payments through
institutions, rules, and regulations
Exchange Rate Regimes
Fixed Exchange Rates
Certain level
Flexible Exchange Rates
Freely floating system
Managed Exchange Rates
Intermediate system. "Dirty Float"
Pushing Power Parity
“law of one price.”
Absolute PPP:Law of one price
and price levels of two countries
Relative PPP: Differences in prices level, inflation rates