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net foreign investment in national income accounting, is synonymous with the current account balance

nominal exchange rate


official reserve assets

holding key

foreign currencies,

special drawing

rights, and reserve positions in the IMF

by official monetary institutions

overall balance

when an economy


internal and external balance


an instance of an

exchange rates short-term response to

rate quotes published in newspapers

that are not adjusted inflation rates in

trading partners

nominal exchange-rate index the average value of a currency, not adjusted for changes in price levels of that country and its trading partners

nominal interest rate

the rate of

return on assets that can be earned in a particular country, not adjusted for the

rate of inflation

nominal tariff rate

the tariff rate

published in a countrys tariff schedule

nonmarket economy

where state

planning and control govern foreign

and sometimes domestic trade

nonrestrained suppliers

a trading

partner that is not restrained voluntary export agreement

by a

official settlements transactions


movement of financial assets among official holders; these financial assets fall into two categories: official reserve assets and liabilities to foreign official


offshore-assembly provision (OAP) when import duties apply only to the value added in the foreign assembly process, provided that domestically made components are used by overseas companies in their assembly operations


t h e r a t i o o f a n a t i o n s

exports and imports as a percentage of

its gross domestic product (GDP)

optimum currency area a region in which it is economically preferable to have a single official currency rather than multiple official currencies

a change in market fundamentals is greater than its long-term response


par value

a central value in terms of a

key currency that governments partic- ipating in a fixed-exchange rate system

set their currencies

partial specialization

when a coun-

try specializes

only partially in the

production of the good in which it has

a comparative advantage

persistent dumping

when a producer

consistently sells products abroad at lower prices than at home


stands for percentage in point and

is the smallest increment of trade in the

forex market

nontariff trade barriers (NTBs) policies other than tariffs that restrict international trade

normal trade relations

the U.S.

governments replacement term most-favored nation

for the

optimum tariff

a tariff rate at which

the positive difference between the gain

of improving terms of trade and the loss of declining import volume is maximized


an agreement between a

holder (buyer) and a writer (seller) that




a pro-

ducer temporarily


the prices

charged abroad to drive foreign com-


out of business


the valuation of a currency

when it is worth more in the forward

market than in the spot market

North American Free Trade



a trade


between Canada,


and the United States, which into effect in 1994


no-trade boundary

the terms-

of-trade limit at which a country

will cease to export a good


offer rate

the price at which the bank

is willing to sell a unit of foreign currency


exchange rate

the exchange

gives the holder the right, but not the obligation, to buy or sell financial instruments at any time through a specified date

Organization of Petroleum Exporting Countries (OPEC) a group of nations that sells petroleum on the world market and attempts to support

prices higher than would exist under more competitive conditions to maxi- mize member-nation profits

outer limits for the equilibrium terms

of trade

defined by the domestic cost

ratios of trading nations


when certain aspects of

price adjustment mechanism quantity of money theory


price-based definition of dumping


method of calculating fair market value in dumping cases; dumping occurs when a company sells a product in its home market at a price above that for

which the same product sells in the foreign market

price-specie-flow doctrine David Humes theory that a favorable trade balance was possible only in the short term, and that over time, it would automatically be eliminated via changes in product prices

rate determined by comparing the par

a products manufacture are performed

primary products

agricultural goods,

values of two currencies

in more than one country

raw materials, and fuels

Copyright 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.

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