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23 Cards in this Set
- Front
- Back
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Portfolio Investments
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Investments in a foreign country via the purchase of stocks (equities), bonds, or other financial instruments. Portfolio investors do not exercise managerial control of the foreign operation
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Sovereign Lending
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Loans from private financial institution in one country to sovereign governments in other countries
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Foreign Direct Investment (FDI)
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Investments in a foreign country via the acquisition of a local facility or the establishment of a new facility. Direct investors maintain managerial control of the foreign operation
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World Bank
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An important international institution that provides loans at below-market interest rates to developing countries, typically to enable them to carry out development projects
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Recession
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A sharp slowdown in the rate of economic growth and economic activity
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Depression
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A severe downturn in the business cycle, typically associated with a major decline in economic activity, production, and investment; a severe contraction of credit; and sustained high unemployment
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Default
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To fail to make payments on a debt
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Austerity
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The application of policies to reduce consumption, typically by cutting government spending, raising taxes, and restricting wages
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Bank for International Settlements (BIS)
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One of the oldest international financial organizations, created in 1930, its members include the world's principal central banks, and under its auspices they attempt to cooperate in the financial realm
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International Monetary Fund
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A major international economic institution that was established in 1944 to manage international monetary relations and that has gradually reoriented itself to focus on the international financial system, especially debt and currency crises
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Multinational Corporations (MNC)
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An enterprise that operated in a number of countries, with production or service facilities outside its country of origin
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Bilateral Investment Treaty (BIT)
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An agreement between two countries about the conditions for private investment across borders. Most BITs include provisions to protect an investment from government discrimination or expropriation without compensation, as well as establish mechanism to resolve disputes
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Exchange Rate
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The price at which one currency is exchanged for another
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Appreciate
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In terms of a currency, to increase in value in terms of other currencies
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Depreciate
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In terms of a currency, to decrease in value in terms of other currencies
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Monetary Policy
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An important tool of national governments to influence broad macroeconomic conditions such as unemployment inflation, and economic growth. Typically, governments alter their monetary policies by changing national interest rates or exchange rates
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Central Bank
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The institution that regulates monetary conditions in an economy, typically by affecting interest rates and the quantity of money in circulation
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Fixed Exchange Rate
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An exchange rate policy under which government commits itself to keep its currency at or around a specific value in terms of another currency or a commodity, such as gold
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Gold Standard
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The monetary system that prevailed between about 1870 and 1914, in which countries tied their currencies to gold at a legally fixed price
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Floating Exchange Rate
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An exchange rate policy under which a government permits its currency to be traded on the open market without direct government control or intervention
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Bretton Woods Monetary System
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The monetary order negotiated among the World War II allies in 1944, which lasted until the 1970s and which was based on a U.S. dollar tied to gold. Other currencies were fixed to the dollar but were permitted to adjust their exchange rates
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Adjustable Peg
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A monetary system of fixed but adjustable rates. Governments are expected to keep their currencies fixed for extensive periods but are permitted to adjust the exchange rate from time to time as economic conditions change
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International Monetary Regime
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A formal or informal arrangement among governments to govern relations among their currencies; the agreement is shared by most countries in the world economy
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