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19 Cards in this Set
- Front
- Back
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The Yuan is undervalued to the US dollar by approx. |
5 to 27% based on the Wall Street Journal |
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The more money in surplus |
the cheaper the value, therefore the value in dollars starts to drop aka loose value.
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We have a trade deficit with China? |
True |
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What 2 kinds of unsustainable situations of pressure for China to change it's policy? |
economic and political pressures |
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basket of goods should be valued the same from one country to another is also called: |
purchasing power parity (PPP). Page 289 |
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The US trade imbalance with China should put --Upward- pressure on the Chinese Yuan. But, since the two currencies are not freely traded, this benefits Chinese exporters, but penalizes what Chinese groups? |
Chinese consumers |
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Since the US dollar is decreasing in value compared to most world currencies, this in turn creates trade imbalances between other countries like _Brazil__ and China (from the video).
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Brazil and China |
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Is the Chinese currency pegged to the US dollar now? |
No. But essentially yes, it is managed very closely. |
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Peg currency does not change in value |
true |
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Carry Trade |
involves one currency where interest is low and then using the proceeds to invest in another currency where interest rates are high. |
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Currency Speculation |
move of funds from one currency to another in the hopes of profiting |
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Spot exchange rate |
exchange rate at which a foreign exchange dealer will convert one currency into another that particular day |
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foreign exchange market |
it enables companies based in countries that use different currencies to trade with each other. |
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International Monetary Fund (IMF) formed in: |
1944 |
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3 currency convertibility |
1. Freely convertible currency 2. Externally convertible currency 3. nonconvertible currency |
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Freely convertible currency |
when the country's government allows both residents and nonresidents to purchase unlimited amounts of foreign currency with it. |
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Externally convertible |
when only NON-residents may convert it into a foreign currency without any limitations. |
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nonconvertible Currency |
when neither residents nor nonresidents are allowed to convert it into a foreign currency. |
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countertrade |
The trade of goods and services for other goods and services. |
