AP Macroeconomics Modules 41-44 (Krugman)

Balance of Payments Accounts

(Module 41) Summary of a country's
transactions with other countries

Current Account

(Module 41) Balance of payments on goods and
services plus net international transfer
payments and factor income

Balance of Payments on Goods and Services

(Module 41) Difference
between its exports and its imports during a
given period

Merchandise Trade Balance

(Module 41) Difference between a
country's exports and imports of goods (does not include services)

Financial Accounts

(Module 41) Difference
between its sales of assets to
foreigners and its purchases of assets
from foreigners during a given period

Foreign Exchange Market

(Module 42) Where currencies are traded

Exchange Rates

(Module 42) Price at which currencies are traded

Appreciates

(Module 42) Increase in value in terms of other currency

Depriciates

(Module 42) Decrease in value in terms of other currency

Equilibrium Exchange Rates

(Module 42) Exchange rate at which the quantity of a
currency demanded in the foreign exchange
market is equal to the quantity supplied

Real Exchange Rates

(Module 42) Exchange rates
adjusted for international differences in
aggregate price levels

Purchasing Power Parity

(Module 42) Nominal exchange rate at which a given basket of goods and services would cost the same amount in each country

Exchange Rate Regimes

(Module 43) A rule governing policy toward the exchange rate

Fixed Exchange Rate

(Module 43) When
the government keeps the exchange rate
against some other currency at or near a
particular target

Floating Exchange Rate

(Module 43) when the government lets the exchange rate go wherever the market takes it

Exchange Market Intervention

(Module 43) Government purchases or sales of currency in the foreign exchange market

Foreign Exchange Reserves

(Module 43) Stocks of foreign currency that governments maintain to buy their own currency on the foreign exchange market

Foreign Exchange Controls

(Module 43) Licensing systems that limit the right of
individuals to buy foreign currency

Devaluation

(Module 44) A reduction in the value of a currency that is set under a fixed exchange rate regime

Revaluation

(Module 44) An increase in the value of a currency that is set under a fixed exchange rate regime