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International Money Flows Essentials
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1
Question
What are current flows in international money flows?
Answer
Trade in goods and services, and income paid and received, accounted in the Current Account
2
Question
What are financial flows in international relations?
Answer
Purchases and sales of financial assets, loans, and capital investment movements, accounted in the Financial Account
3
Question
What does convertibility mean in financial flows?
Answer
The domestic currency can be freely converted into foreign currency
4
Question
Which transactions are covered under current account convertibility?
Answer
Payments on trade and income flows
5
Question
When did the EU achieve current account convertibility?
Answer
Approximately 1958
6
Question
When did Hungary achieve current account convertibility?
Answer
Approximately 1994
7
Question
What is today's mainstream approach to financial transactions?
Answer
Full convertibility, free transactions, liberalization, and globalization
8
Question
What does symmetry of interdependence refer to?
Answer
How monetary policy affects both own and foreign economies equally
9
Question
Is there any fully independent country in monetary policy today?
Answer
No
10
Question
What is one criterion for a world key currency?
Answer
Share in global official holdings of foreign exchange reserves
11
Question
What role does a key currency play in international public offers?
Answer
Denomination of IPOs and loans
12
Question
What is the currency of trading contracts for a key currency?
Answer
Used for settling international trades
13
Question
What is equilibrium in global international money flows?
Answer
Balanced current account (CA) and net financial position (NFA) of countries
14
Question
Which European countries are classified as creditors?
Answer
Austria, Belgium, Denmark, Finland, Germany, Italy, Luxembourg, the Netherlands, Norway, Sweden, and Switzerland
15
Question
Which European countries are classified as debtors?
Answer
Cyprus, Greece, Ireland, Portugal, Slovenia, and Spain
16
Question
Which countries are oil exporters in the classification?
Answer
Azerbaijan, Iran, Kazakhstan, Kuwait, Nigeria, Oman, Qatar, Russia, Saudi Arabia, the United Arab Emirates, and Venezuela
17
Question
What does GDP measure?
Answer
Output or income generated within a country's borders
18
Question
What is the formula for GDP?
Answer
GDP = C + I + G + (X - M)
19
Question
What is domestic absorption (DA) in GDP?
Answer
C + I + G
20
Question
What does net export (X - M) represent in GDP?
Answer
Exports minus imports
21
Question
What does GNI measure?
Answer
Output or income generated by national factors
22
Question
What is the formula for GNI?
Answer
GNI = C + I + G + (X - M) + BPI
23
Question
What is BPI in GNI?
Answer
Net primary income: balance of incomes paid to foreigners and received from abroad related to factors of production
24
Question
What does GNDI measure?
Answer
Total disposable income of home actors (residents)
25
Question
What is the formula for GNDI?
Answer
GNDI = C + I + G + CA
26
Question
What does CA include in GNDI?
Answer
Net exports plus all net primary and secondary income
27
Question
Why is Hungary's GNI lower than GDP?
Answer
Negative primary income balance vis-à-vis foreigners
28
Question
What causes Hungary's negative income balance?
Answer
Foreigners' investments exceed Hungarian investments abroad, leading to more equity income and interest paid abroad
29
Question
What offsets Hungary's negative equity and interest?
Answer
Not fully offset by positive balance from employee compensation and transfer primary income
30
Question
What is the main measure of external balance?
Answer
Current Account balance (CA)