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11 Cards in this Set
- Front
- Back
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Dollarize |
When a country that is not the United States uses the dollar as its currency |
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Foreign Exchange Market |
The market in which people buy one currency while using another currency. |
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Foreign Direct Investment (FDI) |
Purchases of firms in another country that involve taking management responsibility. |
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Portfolio Investment |
An investment in another country that is purely financial and doesn't involve any management responsibility. |
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Hedge |
Using a financial transaction as protection against risk. |
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Appreciating |
When a currency is worth more in terms of other currencies; also called "strengthening." |
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Depreciating |
When a currency is worth less in terms of other currencies; also called "weakening." |
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Purchasing Power Parity |
The exchange rate that equalizes the prices of internationally traded goods across countries. |
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Floating Exchange Rate |
When a country lets the value of its currency be determined in the exchange rate market. |
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Soft Peg |
An exchange rate policy where the government usually allows the exchange rate to be set by the market, but in some cases, especially if the exchange rate seems to be moving rapidly in one direction, the central bank will intervene. |
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Hard Peg |
An exchange rate policy in which the central bank sets a fixed and unchanging value for the exchange rate. |
