MSOM_305_Foreign_Exchange[1]

MSOM_305_Foreign_Exchange[1] - MSOM 305 Managing in a...

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MSOM 305 Managing in a Global Economy Dealing with Foreign Exchange Constant Cheng George Mason University Fall 2010
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ECONOMIC POLICIES AND IMPACT Inflation vs Unemployment Role of central bank Fiscal policy Monetary policy Balance of Payment
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BOP ACCOUNTS Current account Records a country’s exports and imports in goods and services Good or merchandise account Services account Unilateral transfers: aids, migrant workers sending money home Capital account Records the net changes in a nation’s international financial assets and liabilities Direct investments (majority ownership and when 1 group owns more than 25% of voting stock) Portfolio investments (stocks and bonds of foreign issuers) Short term capital flow: currency hedging funds Official Reserves account Records the assets held by the government: gold, foreign currencies, and accounts in foreign banks
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BALANCE OF PAYMENTS (BOP) The state of a nation’s BOP reveals the state of that country’s economy If the BOP is slipping into deficit the government is probably considering one or more market or nonmarket measures to correct or suppress that deficit
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MSOM_305_Foreign_Exchange[1] - MSOM 305 Managing in a...

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