Glossary from chapter 15 "Exchange Rates and International Capital Flows" of the book OpenStax, Principles of Macroeconomics for AP® Courses
This glossary was extracted from Chapter 15 of the book OpenStax, Principles of Macroeconomics for AP® Courses. OpenStax CNX. 4 Aug 2017 which is licensed under a Creative Commons Attribution 4.0 International License.
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when a currency is worth more in terms of other currencies; also called “strengthening”
when a currency is worth less in terms of other currencies; also called “weakening”
a country that is not the United States uses the U.S. dollar as its currency
purchasing more than ten percent of a firm or starting a new enterprise in another country
the market in which people use one currency to buy another currency
using a financial transaction as protection against risk
an investment in another country that is purely financial and does not involve any management responsibility
the process of buying a good and selling goods across borders to take advantage of international price differences
the exchange rate that equalizes the prices of internationally traded goods across countries
a country lets the value of its currency be determined in the exchange rate market
an exchange rate policy in which the central bank sets a fixed and unchanging value for the exchange rate
flow of financial capital across national boundaries either as portfolio investment or direct investment
when a nation chooses to use the currency of another nation
an exchange rate policy in which 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
see international capital flows