Download Chapter 17 International Finance Name

Chapter 17 International Finance
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1. The number of units of a nation’s money that is equal to one unit of
another nation’s money is the ( ) ( ) between those two monies
2. If the exchange rate between the Dollar and the British pound were $2
equals one pound, a good prices at 150 pounds in England would cost a
U.S. buyer ( ) dollars, and a U.S. good priced at $20 would cost someone
in England ( ) pounds.
3. Until 1971, the exchange between the US dollar and many other nations’
monies were based on a ( ) exchange rate system. One unit of each
nation’s money would command a certain amount of ( ).
4. In a fixed exchange rate system lowering the gold backing is called ( ).
This made foreign goods and services ( ) expensive and the nation’s
goods and services ( ) expensive for foreign buyers.
5. After 1971, exchange rates were set by the forces of ( ) and ( ). This is
called a ( ) or ( ) exchange rate system.
6. There is a ( ) relationship between the price of money and the quantity
supplied.
7. There is an ( ) relationship between the price of money and the
quantity demanded.
8. A change in the supply or demand changes the money’s ( ) ( ).
9. After the Lord of the Rings, if there was a sudden demand by Americans
for travel to New Zealand, the equilibrium price of the NZ dollar would
( ). The US dollar becomes worth ( ) in terms of the NZ dollar, and
the NZ dollar become worth ( ) in terms of the US dollar.
10. Factors that affect the exchange rate:
a. For Americans, inflation in the US would cause the price of US
goods to ( ), while the price of European goods would become
relatively (more/less) expensive to Americans. For example the
demand for Euros would ( ). If there were inflation in Europe
the demand for US dollars would ( ).
b. An increase in the demand for Americans goods by the Brits would
cause the price of dollars to ( ), in terms of the pound.
c. Higher interest rates in Venezuela than the US will attract
American investment funds. The country whose currency will
appreciate is ( ). The country whose currency will depreciate is
( ).
11. There are three different methods of keeping track of how one country is
doing in regard to trading with another country. These are the Balance of
payments, the balance on current account and the balance on capital
account.
a. The account that measures the value of the sale of financial assets
between countries is the ( ) account.
b. The account that keeps track of the difference between the value of
exports and imports is the ( ).
c. The account that measures the dollar value of export and imports,
and the income from foreign investments is the ( ) account.
12. If exports are greater than imports then there is a balance of trade ( ),
but if imports exceed exports, then a ( ) exists.
13. Money owed by borrowers in one country to lenders in another country
is ( ) ( ).