Transcript AP JEOPARDY!

JEOPARDY!
Trabecono
mics II!
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Trabeconom
ics
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Value of
currency
Trade basics
Impact of
Exchange
Rates
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The price of one currency in
terms of another
Exchange Rate
Rates determined in free markets
by supply and demand.
Floating exchange rates.
When a unit of a country’s
currency can buy more of another
currency.
Appreciation
If you take a trip to Europe, the
value of the dollar will do this.
Depreciate
An open market sale by the Fed
will lead the currency to
_______. (Hint: capital flows…)
Appreciate
Exchange rates set by
government decisions and
maintained by government
actions.
Fixed exchange rates.
A reduction in the official value
of a currency.
Devaluation
An increase in the official value
of a currency.
Revaluation.
Following an increase in imports,
the government will have to
maintain a balance of payments
_______ if it wishes to maintain
current exchange rates.
Deficit
The amount by which the
quantity demanded of a country’s
currency exceeds the quantity
supplied, at a given price.
Balance of Payments Surplus
As a foreign country’s GDP rises,
the U.S. GDP will _______, all
other things being equal.
Rise
The ability to produce something
more efficiently than a trading
partner.
Absolute Advantage
In informal terms: if you are
terrible at everything this
describes the activity that you are
least terrible at doing .
Comparative Advantage.
DAILY DOUBLE!
________ account flows
describe payments that cross
borders to pay for financial assets
such as bank accounts, bonds,
and stock.
Capital Account
If the United States buys more
goods from Canada than Canada
does from us we run this.
Current account deficit
______ _____ have the most
immediate impact on exchange
rates.
Interest rates.
In the “medium run”, this has the
most significant impact on
exchange rates.
Economic Performance
The supply of a currency is
generated primarily by a
country’s _______
Desire for Imports
DAILY DOUBLE!
This describes how exchange
rates adjust do that over the long
run the same good costs the same
in every currency.
Purchasing Power Parity
According to the purchasing
power parity theory, differences
in country’s _______ _____ are
primarily responsible for changes
of exchange rates.
Inflation rates
Currency Appreciates: What
happens to exports?
Decrease
Currency Appreciates: What
happens to Aggregate Demand?
Shifts to the left
Currency Depreciates: What
happens to net exports?
Increase
Currency Depreciates: What
happens to Real (adjusted for
inflation) GDP?
Increase
Currency Appreciates: What
happens to inflation?
Inflation falls
This guy makes appearances
in a variety of MTV shows,
and has produced his own
movie “Don’t try this at
home” / A nation that freely
trades with other nations.
Steve-Open Economy
China runs this
in the capital
account with
the United
States / He
captains the
Pittsburgh
Penguins
Defi-Sidney Crosby
Clandestine
government
research facility
which created
Wolverine / the
price of one
currency in terms
of another
Weapon Xchange Rate
Artist shown here
/ A reduction in
the value of a
currency
P-diddepreciation
Increased
demand for
exports will lead
to currency
________ / This
actor plays
“Stiffler”
Apprecia-Seann William Scott
America’s consumption
possibilities frontier may be
expanded using this / A Dan
Akroyd and Eddie Murphy
movie shot in Philadelphia
(about economics!)
International Trading Places
DAILY DOUBLE!
American goods
which are sold in
international
markets \ The
last name of the
actress who plays
Queen Amidala
in Stars Wars.
ExPortman
Goods purchased
from foreign
countries/ This IFC
sketch comedy series
stars Fred Armisen
and Carrie Brownstein
ImPortlandia
• He announced he will
retire as an Eagle / If a
country can produce a
good more efficiently
than another, it has
this.
Donovan McN-absolute
advantage
• If a country can
produce something at
a lower opportunity
cost than another
country, it has this/
He’s U2’s guitarist.
Comparative Advant-Edge
A legal limit on the import
or export of goods across
borders /
this MC formed one half
of the Hip-Hop group Black
Star – the other half was Mos
Def.
Quo-Talib Kweli