Balance of Payment Word Scramble
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| Question | Answer |
| Arbitrage | This is the purchase of an asset (usually a currency) is one market ant its sale in another in order to make profit. |
| Balance of Payments | This is a statistical statement that summarises the economic transactions of the residents of a country with the rest of the world for a specific time period, usually one year. |
| Balance of trade | This is export of goods minus imports of goods (or visible balance). |
| Capital account of the Balance of Payments | This account record capital transfers between a country and the rest of the world. |
| Currency speculation | This is the buying and selling of currencies in order to make profits. |
| Current account of the Balance of Payments | This consists of trade in goods and services, income inflows and outflows and current transfers. |
| Devaluation | This refers to a fall in the value of a country's currency in terms of other currencies. |
| Equilibrium rate of exchange | The rate of exchange that ensures a country's exports are equal to its imports, that is, the correct rate of exchange for that currency. |
| Financial account of the Balance of Payments | This covers transactions in financial assets and financial liabilities. |
| Fixed exchange rate | This is when the government chooses a value for the country's currency relative to all other currencies and keep it fixed at this value. |
| Floating exchange rate | This is when the government allows the value of the currency to move up or down according to demand for and supply of the currency. |
| Invisible balance | This includes export and import of services, income inflows and outflows and current transfers. |
| Marshall-Lerner Conditions | This states that a devaluation will improve a country's balance of trade if the sum of the elasticities of demand for export and imports is greater than 1. |
| Net errors and omissions | This is the balancing item entered in the Balance of Payments figures to ensure that the overall balance of payment is balanced. |
| Purchasing Power Parity Theory | This states that the exchange rate between one current and another is in equilibrium when the domestic purchasing powers of the currencies are equal. |
| Rate of exchange | This is the price of one currency in term of the currencies. |
| Revaluation | This refers to a risk in the value of a country's currency in terms of other currencies. |
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jmartineconomics
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