国际金融复习提纲.docx
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国际金融复习提纲.docx
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国际金融复习提纲
Outline for Reviewing International Finance (2013)
The Structure of Examination Paper
1. Multiple Choice (30×1, 30 points)
2. Definition of Terms(5×4, 20 points)
3. Short Answer (3×10, 30 points)
4. Calculation (2×10, 20 points)
Outline for Reviewing
Multiple Choice
Cover all Chapters
Definition of Term
Chapter 12:
balance of payments accounting, current account balance,official settlements
balance,national saving
balance of payments accounting:
国际收支会计 accountingrecordofall
monetary transactions between a country and the rest of the world
Current account balance (exports minus imports):
经常项目差额 net expenditure by
foreigners on domestic goods and services.
The official settlements balance :
官方结算差额 is the negative value of official international
reserve assets, and it shows a central bank’s holdings of foreign assets relative to foreign central
banks’ holdings of domestic assets.
The bookkeeping offset to the balance of official reserve transaction .
National saving= national income (Y) that is not spent on consumption (C) or government
purchases (G).
Chapter 13:
appreciation, exchange rate, real rate of return, forward exchange rate,spot
exchange rate,interest parity condition, vehicle currency
Appreciationis an increase in the value of a currency relative to another currency.
Exchange rate:
The price of one currency in terms of another is called an exchange rate.
The real rate of return :
The expected rate of return that savers consider in deciding which
assets to hold is the expected real rate of return, that is, the rate of return computed by measuring
asset values in terms of some broad representative of products that savers regularly purchase.
forward exchange rates:
Foreign exchange deals sometimes specify a value date farther away
than two days30 days, 90 days, 180 days, or even several years. The exchange rates quoted in such
trans-actions are called forward exchange rates.
The foreign exchange transactions we have been discussing take place on the spot:
two par-ties
1
agree to an exchange of bank deposits and execute the deal immediately. Exchange rates
governing such "on-the-spot" trading are called spot exchange rates, and the deal is called a spot
transaction.
Interest parity condition:
Interest parity implies that deposits in all currencies areequally
desirable assets.
Interest parity implies that arbitrage in the foreign exchange market is not possible.
vehicle currency:
周转货币 Because of its pivotal role in so many foreign exchange deals, the
dollar is sometimes called a vehicle currency
Chapter 14:
aggregate money demand, money supply, exchange rate overshooting,
Aggregate money demand:
货币总和需求aggregate money demand is the total demand for
money by all households and firms in the economy.is just the sum of all the economy’s individual
money demands.
Money supply:
the total stock of money in the economy; currency held by the public plus
money in accounts in banks
Exchange rate overshooting:
the exchange rate is said to overshoot when its immediate
response to a disturbance is greater than its long-run response.
Chapter 15:
Fisher effect, law of one price, nominal interest rate, purchasing power parity
(PPP), real exchange rate, relative PPP
Fisher effect:
describes the relationship between nominal interest rates and inflation.
Law of one price:
the low of one price states that in competitive markets free of transportation
costs and official barriers to trade(such as tariffs),identical goods sold in different countries must
sell for the same price when their prices are expressed in terms of the same currency.
Nominal interest rate:
名义利率 An interest rate is called nominal if the frequency of
compounding (e.g. a month) is not identical to the basic time unit (normally a year).
Purchasing power parity(PPP):
the theory of purchasing power parity states that the exchange
rate between two countries’ currencies equals the ratio of the countries’ price levels.
Real exchange rate:
the rate of exchange for goods and services across countries
Relative PPP:
states that the percentage change in the exchange rate between two currencies
over any period equals the difference between the percentage changes in national price levels.
Chapter 16:
AA schedule, inflation bias, aggregate demand, J-curve, DD schedule, pass-
through
AA schedule:
The schedule of exchange rate and output combinations that are consistent with
equilibrium in the domestic money market and the foreignexchange market is called the AA
schedule.
inflation bias:
Refers to the difference between the mean value and the target value of inflation
according to the circulation by the basic model.
DD schedule:
The curve shows all combinations of output and the exchange rate for which the
output market is in short run equilibrium.
pass-through:
The percentage from the exchange rate to import prices by which import prices
rise when the home currency depreciates by 1 percent.
Chapter 17:
balance of payments crisis, bimetallic standard, capital flight,devaluation,
2
gold exchange standard, gold standard, imperfect asset substitutability,managed floating
exchange rates, perfect asset substitutability, reserve currency,revaluation, risk premium,
self-fulfilling currency crises, sterilized foreign exchange intervention,
balance of payments crisis:
When a central bank does not have enough official international
reserve assets to maintain a fixed exchange rate, a balance of payments crisis results.
bimetallic standard:
the value of currency is based on both silver and gold.
capital flight:
financial capital is quickly moved from domestic assets to foreign assets
devaluation:
a devaluation occurs when the central bank raises the domestic currency price of
foreign currency
gold exchange standard:
halfway between the gold standard and a pure reserve currency
standard is the gold exchange standard
gold standard:
gold acts as official international reserves that all countries use to make official
international payments.
imperfect asset substitutability:
In general, foreign and domestic assets may differ in the
amount of risk that they carry:
they may be imperfect substitutes.
managed floating exchange rates:
system in which governments may attempt to moderate
exchange rate movements without keeping exchange rates rigidly fixed .
perfect asset substitutability:
the key feature of our model that leads to these results is the
assumption that the foreign exchange market is in equilibrium only when the expected returns on
domestic and foreign currency bonds are the same.
reserve currency:
one currency acts as official international reserves.
Revaluation:
a revaluation occurs when the central bank lower the domestic currency price of
foreign currency
risk premium:
default risk and exchange rate risk
self-fulfilling currency crises:
Expectations of a balance of payments crisis only worsen the
crisis and hasten devaluation that occur in such circumstances often are called self-fulfilling
currency crises .
sterilized foreign exchange intervention:
central banks sometimes carry our equal foreign
and domestic asset transactions in opposite directions to nullify the impact of their foreign
exchange operations on the domestic money supply . this type of policy is called sterilized foreign
exchange intervention
Chapter 18:
external balance, internal balance, expenditure-changing policy, price-specie-
flow mechanism, expenditure-switching policy
external balance:
A country’s current account is neither so deeply in deficit that the country
may be unable to repay its foreign debts in the future nor so strongly in surplus that foreigners are
put in that position.
Internal balance:
The full employment of a country’s resources and domestic price level
stability.
expenditure-changing policy:
Changing social needs or total expenditure level of the national
economy policy, whose purpose is to change aggregate demand to change the demand for foreign
goods, services and financial assets, and achieve the balance of payments adjustment.
price-specie-flow mechanism:
Under the internationally common practice of the gold
3
standard, a country's international balance of payments can keep equilibrium automatically by the
fluctuations of commodity price and the output or input of gold.
expenditure-switching policy:
The policies which can affect the international competitiveness
of commodities and to increase their income relative to spending by changing the spending
structure.
Chapter 19:
destabilizing speculation
destabilizing speculation:
it means that if foreign exchange traders saw that a currency was
depreciating, it was argued, they might sell the currency in the expectation of future depreciation
regardless of the currency ‘s longer-term prospects; and as more traders jumped on the bandwagon
by selling the currency, the expectations of depreciation would be realized.
Chapter 20:
monetary efficiency gain, economic stability loss, optimum currency areas
monetary efficiency gain:
the monetary efficiency gain from joining the fixed
exchange rate system equals the joiner’s saving from avoiding the uncertainty,
confusion, and calculation and transaction costs that arise when exchange rates float.
economic stability loss:
the extra instability caused by the fixed exchange rate is the
economic stability loss
fixed exchange rates are most appropriate for areas closely integrated through
international trade and factor movements.
Short Answer
Chapter 13
1.The Effect of Changing Interest Rates on the Current Exchange Rate
An increase in the interest paid on deposit of a currency causes that currency to appreciate
against foreign currencies.
A rise in dollar interest rates causes the dollar to appreciate against the euro.
4
A rise in euro interest rates causes the dollar to depreciate against
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