Chapter 9

the Foreign Corrupt Practices Act

made it illegal for a firm to offer bribes to foreign parties for the purpose of securing or retaining business including foreign firms while in the U.S. and firms with securities listed in the U.S.

legal systems

provide a framework of rules and norms of conduct that mandate, limit, or

Trade Surplus

A condition in which a nation's exports exceed its imports for a specific period of time.

Trade deficit

A condition in which a nation's imports exceed its exports for a specific period of time.

Special Drawing Right (SDR)

A unit of account of a reserve asset, a type of currency central bans use to supplement their existing reserves in transactions with the IMF>

Bank for International Settlement

Bank for International Settlement The ____ is responsible to ensure that central banks maintain reserve assets and capital/asset ratios above prescribed international minimums so as to avoid over indebtedness.

Devaluation

Government action to reduce the official value of its currency relative to other currencies.

International monetary system

Institutional framework, rules, and procedures by which national currencies are exchanged for one another.

Currency Risk

Potential harm that arises from changes in the price of one currency relative to another.

The General Agreement on Tariffs and Trade (GATT)

The most important development of the last century for reducing trade barriers was

Exchange Rate

The price of one currency expressed in terms of another; the number of units of one currency that can be exchanged for another.

Capital Flight

The rapid sell-off by residents or foreigners of their holdings in a nation's currency or other assets, usually in response to a domestic crisis that causes investors to lose confidence in the country's economy.

Customs Union

When member states harmonize their external trade policies and adopt common tariff and nontariff barriers on imports from nonmember countries they create a

Microfinance

refers to providing small-scale financial services to facilitate entrepreneurship in emerging markets

Foreign Exchange

All forms of money that are traded internationally, including foreign currencies, bank deposits, checks, and electronic transfers.

International Monetary Fund (IMF)

An international agency that aims to stabilize currencies by monitoring the foreign exchange systems of member countries and lending money to developing economies.

World Bank

An international agency that provides loans and technical assistance to low-and middle-income countries with the goal of reducing poverty.

Dirty float

At times countries try to hold the value of their currency within some range; market forces determine the currency value, but the central bank intervenes occasionally in the foreign exchange market to maintain the value of its currency within acceptable limits relative to a major reference currency. This is called a

foreign currency reserves

For a government to intervene in currency markets and increase the value of its own currency the country needs to have

Subsidies

The European and U.S. governments provide supplemental income to farmers and help manage the supply of agricultural commodities under a system called

Balance of payments

The annual accounting of all economic transactions of a nation with all other nations.

Monetary Intervention

The buying and selling of currencies by a central bank to maintain the exchange rate of a country's currency at some acceptable level.

Global financial system

The collective of financial institutions that facilitate and regulate investment and capital flows worldwide, such as central banks, commercial banks, and national stock exchanges.

Foreign exchange market

The global marketplace for buying and selling national currencies.

Central Bank

The monetary authority in each nation that regulates the money supply and credit, issues currency, and manages the exchange rate of the nation's currency.

Harmonized Code

The standardized worldwide system that determines tariff amount according to product classification is called the

free-flow of information in the mass media

Totalitarian states could be characterized by all of the following Except: