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The Monetary System in the International Arena - Coggle Diagram
The Monetary System in the International Arena
The Foreign Exchange Market
The exchange rate is a relative price.
Example: $1 = ₤1.10
The foreign exchange market, where different national currencies are bought and sold.
Balance of Payments Disequilibrium
Accommodating
Transactions occurring in order to compensate for differences between payments and receipts arising from a country's autonomous transactions.
Balance of payments should always be zero.
Autonomous transactions are independent of the balance of payments in the sense that they are affected by factors outside the balance of payments.
International Transactions
Monetary system becomes complicated in the process of buying and selling goods or services.
Change domestic and foreign money.
Foreign Exchange Market
A market in which one currency is exchanged for another currency; for example, in the market for Euros, the Euro is being bought and sold, and is being paid for using another currency, such as the yen.
Balance of Payments
Debit Transactions (-)
Short-term Assets
Transfers to Foreign Residents
Long-term Assets
Imports
Credit Transactions (+)
Exports
Sell of Long-term Assets
Sell of Short-term Assets
Transfers from Foreign Residents
Current and Capital Accounts
Capital Accounts
Shows the net worth of a business at a specific point in time. It is also known as owner's equity for a sole proprietorship or shareholders' equity for a corporation, and it is reported in the bottom section of the balance sheet.
It is located in the Capital Account in the Balance Sheet.
Current Accounts
An account at a bank against which checks can be drawn by the account depositor; a checking account.