Unit 6 - International Trade and Finance

Trade Surplus

Exports>Imports

Trade Deficit

Imports>Exports

Balance of Payments

an accounting system that keeps track of transactions between countries over a period of time

Current Account (CA)

A tally of all international transactions in goods, services, and income that occur through market transactions or transfers

Capital and Financial Account (CFA)

measures the purchase and sale of financial assets abroad

Exchange Rate

the price of one currency relative to another

Appreciation

An increase in the value of a currency relative to another

Depreciation

a decrease in the value of a currency relative to another

Foreign Exchange Market

a market in which currencies of different countries are bought and sold

Tariff

a tax on imports

Quota

a limit on the quantity of imports

Fixed Exchange Rate

the government actively manages the country's currency

Floating Exchange Rate

the market determines the value of the country's currency