IB quiz 3 (from online) – Flashcards
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job loss
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what is an argument against economic integration?
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regional economic integration
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countries is an region cooperate to reduce or eliminate trade barriers
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trade diversion
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what is NOT a positive effect of regional integration?
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in a similar way
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How do members of a custom union treat nonmembers?
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United Nations
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give an example of something that is not a trading bloc
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lack of price transparency
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what is NOT a criteria for member nations to use the Euro?
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28
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how many members does the EU have?
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canada, US, mexico
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who are some members of NAFTA?
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loss of american jobs
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why do some people oppose NAFTA?
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10, lacks common tariffs and standards
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how many countries are in ASEAN? what does it lack?
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offshore financial center
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country whose financial sector has few regulations and taxes
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capital market
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allocates financial resources in the form of debt and equity according to the most efficient uses.
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international capital market
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Capital market that works across international borders
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equity
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seen as stock, or shares of ownership in a company's assets
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eurobond
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bond issues outside the country in whose currency it is denominated
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international equity market
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all stocks bought and sold outside the issuer's country
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international bond, equity and eurocurrency market
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main components of international capital market
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bond, equity
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interest rates are part of _____ not ______
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hard currency
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what is a type of currency, but not a reason for using a market
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currency arbitrage
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instantaneous purchase and sale of a currency
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foreign exchange market
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market where currencies are bought and sold an prices determined
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securities exchange
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what are exchange rates NOT dependent on?
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supply and demand
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what determines currency prices and is conducted through a process of bid and ask quotes?
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spot rate
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exchange rate that requires delivery of traded currency within 2 business day
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currency hedging
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insuring against potential losses that result from adverse changes in exchange rates
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vehicle currency
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used as a intermediary to convert funds between 2 other countries (ex US)
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barter
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form of countertrade, goods exchanged for others of equal value
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devaluation
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lowering of currency value
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predicable/flexible
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managers want movements in exchange rates to be:
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law of one price
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an identical product must have an identical price in all countries when price is expressed in common currency
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Big mac index
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what is NOT a reason for PPP failing to predict exchange rates
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determining exchange rate level
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what is PPP useful in?
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fiscal policy
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using taxes and government spending to influence money supply indirectly
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fisher effect
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nominal interest rate is sum of real interest rate and expected inflation
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gold standard
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nations link value value of paper currency to gold
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international monetary system
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collection of agreements and institutions that govern exchange rates
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free float system
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currencies float freely against one another without governments intervening in currency markets
