MAN 3600 Exam 3
Study online at https://quizlet.com/_6eue93
1. Convertible currency Can be readily exchanged into another currency
2. Non-convertible currency Cannot be exchanged for another currency
3. Hard currency Most convertible currencies that are universally accepted
(Canadian dollar, British pound, USD, Japanese yen, Euro-
pean euro)
4. Exchange rate -Price of one currency in terms of another
-Constantly fluctuating
5. Big Max Index Measure of PPP by testing price of the same good in two
different countries
6. Currency valuation (Price local - price US)/Price US
7. Local currency valuation Local currency X exchange rate = price in USD
8. Purchasing Power Parity An exchange rate will equalize the price of an identical prod-
uct or service in two different countries
9. Law of One Price The exchange rate based on just one product
10. Exchange rates are determined Supply and demand
by
11. Factors that influence exchange -Economic growth
rates -Interest rates and inflation
-Market psychology
-Government action
-Trade balance
12. Economic growth
1/6
, MAN 3600 Exam 3
Study online at https://quizlet.com/_6eue93
-Increase in value of goods/services produced by an econ-
omy
-Ethiopia fastest growing
13. Market psychology Investor behavior (herding behavior and momentum trad-
ing)
14. Inflation -Increases in prices of goods/services
-Zimbabwe has highest inflation
15. Interest rates Has positive relationship with inflation
16. Factors that influence supply Government action and balance of payments
and demand for a currency
17. Government action -Governments intervene to influence the value of their own
currencies
-China's known for this
18. Balance of payments -Balance sheet of trade, investment, and transfer payments
with the rest of the world
-Keeps track of exports and imports
19. Trade surplus Exports exceed imports
20. Trade deficit Imports exceed exports
21. Spot transactions -Exchange of currencies for immediate delivery
-Happens on the spot
22. Forward transactions Exchange of currencies on a future date at an agreed upon
rate
23. Options
2/6
Study online at https://quizlet.com/_6eue93
1. Convertible currency Can be readily exchanged into another currency
2. Non-convertible currency Cannot be exchanged for another currency
3. Hard currency Most convertible currencies that are universally accepted
(Canadian dollar, British pound, USD, Japanese yen, Euro-
pean euro)
4. Exchange rate -Price of one currency in terms of another
-Constantly fluctuating
5. Big Max Index Measure of PPP by testing price of the same good in two
different countries
6. Currency valuation (Price local - price US)/Price US
7. Local currency valuation Local currency X exchange rate = price in USD
8. Purchasing Power Parity An exchange rate will equalize the price of an identical prod-
uct or service in two different countries
9. Law of One Price The exchange rate based on just one product
10. Exchange rates are determined Supply and demand
by
11. Factors that influence exchange -Economic growth
rates -Interest rates and inflation
-Market psychology
-Government action
-Trade balance
12. Economic growth
1/6
, MAN 3600 Exam 3
Study online at https://quizlet.com/_6eue93
-Increase in value of goods/services produced by an econ-
omy
-Ethiopia fastest growing
13. Market psychology Investor behavior (herding behavior and momentum trad-
ing)
14. Inflation -Increases in prices of goods/services
-Zimbabwe has highest inflation
15. Interest rates Has positive relationship with inflation
16. Factors that influence supply Government action and balance of payments
and demand for a currency
17. Government action -Governments intervene to influence the value of their own
currencies
-China's known for this
18. Balance of payments -Balance sheet of trade, investment, and transfer payments
with the rest of the world
-Keeps track of exports and imports
19. Trade surplus Exports exceed imports
20. Trade deficit Imports exceed exports
21. Spot transactions -Exchange of currencies for immediate delivery
-Happens on the spot
22. Forward transactions Exchange of currencies on a future date at an agreed upon
rate
23. Options
2/6
