APM Unit 6 Lesson

Front

What does the balance of payments statement summarize?

Back

Economic transactions between the U.S. and other countries

Front

What is recorded in the current account of the balance of payments?

Back

Import and export of goods and services

Front

What indicates a deficit in the current account?

Back

More dollars are sent abroad than received

Front

What does a surplus in the capital account suggest?

Back

Foreign investment in the U.S. exceeds American investment abroad

Front

How does the Federal Reserve manage a balance of payments deficit?

Back

By adding foreign currencies to the official reserves

Front

What is the trade balance?

Back

The difference between the value of exports and imports

Front

What role do foreign exchange reserves play?

Back

Maintaining the stability of a country's currency

Front

What do exchange rates represent?

Back

The price of one currency in terms of another

Front

What can lead to currency depreciation according to the passage? Options: Increased preference for foreign goods, High inflation rates, Strong economic growth, Central bank intervention

Back

Increased preference for foreign goods

Front

How does speculation affect currency markets?

Back

It can cause currency appreciation or depreciation