Close
Foreign Exchange Market
Exchange Rate
A fall in the value of one currency vs. another is currency ______
A rise in value of one currency vs. another currency is currency _________
When people who are holding US$ want to exchange it for CA$, they
The quantity of CA$ that traders plan to buy in the foreign exchange market depends on
the higher the exchange rate (the price of CA$), the _______ is the quantity of CA$ demanded in the foreign exchange market
Why is the demand curve for Canadian dollars downward sloping?
Exports Effect
Expected Profit Effect
As the price does up, the quantity demanded goes _____
The supply curve for CA$ is the relationship between __________ and ___________
Why is the supply curve for Canadian dollars sloping upward?
Imports Effect
Expected Profit Effect
The higher the price, the ______ the quantity supplied
If the exchange rate is too high, a ______ of Canadian dollars drives it ______
If the exchange rate is too low, a _______ of Canadian dollars drives it ______
Changes in things other than the exchange rate will shift the demand curve for CA$
World Demand for Canadian Exports
Canadian Interest Rate vs Foreign Interest Rates
Canadian Interest Rate Differential
Expected Future Exchange Rate
Changes in anything other than the exchange rate will shift the supply curve
Canadian Demand for Imports
Canadian Interest Rate Differential
Expected Future Exchange Rate
Arbitrage
Interest Rate Parity
Purchasing Power Parity (PPP)
Nominal Exchange Rate
Real Exchange Rate
Real Exchange Rate Equation
Real Exchange Rate in the Short-Run Equation
Real Exchange Rates in the Long-Run Equation
3 possible exchange rate policies are
Flexible Exchange Rate
Fixed Exchange Rate
If demand increases, the Bank of Canada _____ CA$. This _____ supply and moves equilibrium back
Crawling Peg
Balance of Payments Account
3 Balance of Payments Accounts
Current Account
Current Account Balance Equation
Inflows
Outflows
Capital Account
Official settlements account
The sum of the balances of the three accounts always _____
A country that is borrowing more from the rest of the world than it is lending to it is called a _______
A country that is lending more to the rest of the world than it is borrowing from it is called a _______
Debtor Nation
Creditor Nation
Investment and Savings Equations
Current Account Balance Equation
Exchange Rate and the Balance of Payments in the Short-Run
Exchange Rate and the Balance of Payments in the Long-Run
