Unit 10: Foreign Exchange Rates and the Balance of Payments

What’s in This Chapter? A pound of strawberries sells for $4 this week and $3.50 next week. A dollar exchanges for 100 Japanese yen one week and 102 Japanese yen the next week. Strawberries decrease in price when they are...

Purchasing Foreign Currency Most countries exchange many goods and services with other countries. Usually, before a product can be purchased from a foreign country, the buyer needs to buy the foreign country’s currency....

Flexible Exchange Rate Systems Most countries allow their currencies to fluctuate in value relative to foreign currencies. The currency values will fluctuate with changes in demand and supply, similar to demand and supply...

A Country’s Inflows and Outflows of Funds Countries that engage in international trade experience inflows and outflows of products, services, currency purchases, and investments. The accompanying flows of money used to pay...

Common BOP Beliefs Three common misconceptions regarding international trade and the balance of payments are: Myth #1: A trade deficit is always bad. A merchandise trade deficit means that a country’s merchandise imports...

  Time limit: 0 Quiz-summary 0 of 10 questions completed Questions: 1 2 3 4 5 6 7 8 9 10 Information This is a ten question multiple-choice quiz covering the material in this Unit. I hope you do well! You have already...