一、名词解释1.Balance of paymentsThe set of accounts recording all flows of the value between a nation’s residents and the residents of the rest of the world during a period of time.2.Current accountThe current account includes all debit and credit items that are exports and imports of goods and services, income receipts and income payments, and gifts.3.Financial account balanceThe net value of flows of financial assets and similar claims(excludes official international serve asset)is the private financial account balance.4.International investment positionIs a statement of the stocks of a nation’s investment assets and foreign liabilities at a point in time, usually at the end of the year.5.Foreign exchangeForeign exchange is the act of trading different nation’s moneys.6.Exchange rateAn exchange rate is the price of one nation’s money in terms of another nation’s money.7.Spot exchange rateThe spot exchange rate is the price for “immediate” exchange.8.Forward exchange rateThe forward exchange rate is the price set now for an exchange that will take place sometime in the future.9.Foreign exchange swapA foreign exchange swap is a package trade that includes both a spot exchange of two currencies and an agreement to the reverse forward exchange of the two currencies.10.ArbitrageArbitrage is the process of buying and selling to make a riskless pure profit.11.Exchange rate riskA person(or an organization like a firm)is exposed to exchange rate risk if the value of the person’s income, wealth, or net worth changes when exchange rate changes unpredictably in the future.12.HedgingHedging is the act of reducing or eliminating a net asset or liability position in the foreign currency.13.SpeculatingSpeculating is the act of taking a net asset position (“long”) or a liability position(“short”)in some asset class, here a foreign currency.14.Forward foreign exchange contractA forward foreign exchange contract is an agreement to exchange one currency for another on some date in the future at a price set now.15.Currency futuresCurrency futures are contracts that are traded on organization exchanges. By entering into a currency futures contract, you can effectively lock in the price at which you buy or sell a foreign currency at a set data in the future.16.Currency optionA currency option gives the buyer(or holder)of the option the right ,but not the obligation, to buy foreign currency (a call option) or to sell foreign currency (a put option) at some time in the future at a price set today.17.Currency swapA currency swap is an agreement that two parties agree to exchange flows of different currencies during a specified period of time.18.Covered interest arbitrageCovered interest arbitrage is buying a country’s currency spot and selling the country’s currency forward, to make a net profit from the combination of the difference in interest rates between countries and the forward premium on the country’s currency.19.Purchasing power parity (PPP)The PPP contains our core understanding of the relationship between product price and exchange rate in the long run.20.Absolute purchasing power parityThe absolute PPP posits that a basket or bundle of tradable products will have the same cost in different countries if the cost is stated in the same currency.21.Relative purchasing power parityThe relative PPP posits that the difference between changes over time in product-levels in two countries will be offset by the change in the exchange rate overtime.22.The law of one priceThe law of one price posits that a product that is easily and freely traded in a perfectly competitive globe market should have the same price everywhere, once the price at the different places are expressed in the same currency.23.OvershootingOvershooting is an act that the exchange rate changes more than seems necessary in reaction to changes in government policies or to other important economic or political news.24.Exchange controlThe country’s government places some restrictions on use of the foreign exchange market.25.Captical controlBy placing limits or requiring approvals for payments related to some (or all) international financial activities,26.Clean floatThe government allows the exchange rate value of its currency to be detemined solely by private supply and demand in the foreign exchange market. The government takes no direct actions to influence exchange rates,27.Managed float/dirty floatAn exchange rate that is generally floating but with the government willing to take direct actions to attempt to influence the market rate.28.Official interventionThe monetary authority enters into the foreign exchange rate market to buy or sell foreign currency.29.Pegged exchange rateAs nothing is fixed forever, the government will change the fixed exchange rate sometime. We use pegged exchange rate in place of fixed exchange rate, in recognition that the government has some ability to move the peg value.30.Adjustable pegAn adjustable peg is an exchange rate policy in which the “fixed” exchange rate value of a currency can be changed form time to time, but usually it is changed rather seldem.31.Crawling pegA crawling peg is an exchange rate policy in which the “fixed”exchange rate value of a currency is changed often, sometimes according to indicators such as the difference in inflation rates.32.SterilizationIt’s an action that the authority separately takes to restore the domestic money back to the economy.33.Sterilization interventionIf the authority does take action to prevent the domestic money supply from changing, then the authority is relying only on intervention to defend the fixed rate.34.Nationally optimal taxIf a country loans large enough to have power over the world market rate of return, it can exploit this market power to its own advantage, at the expense of other countries and the world as a whole.35.ContagionIt’s a phenomenon that when a crisis hits one country, it usually spreads and affects many other countries.36.Moral hazardIn which lenders believe that they can lend with little risk because a rescue will bail them out.37.Debt restructuringDebt restructuring refers to two types of changes in the terms of trade:①Debt restructuring changes when payments are due, by pushing the repaymentsschedule further into the future. The amount of debt is effectively the same, but theborrower has a long time to pay it off.②Debt reduction lowers the amount of debt.二、辨析题1.”A country is better of running a current account surplus rather than a current account deficit.”Do you agree or disagree? Explain.Disagree, at least as a general statement. One meaning of a current account surplus is that the country is exporting more goods and services than it is importing. One might easily judge that this is not good because that would allow it do more consumption and domestic investment. On the contrary, a current account deficit might be considered good. Another meaning of a current account surplus is that the country is engaging in foreign financial investment—it is building up its claims on foreigners, and this adds to national wealth. This sounds good, but as noted above it comes at the cost of foregoing current domestic purchases of goods and services. Also, a current account deficit is on the other hand. Different countries at different times may weigh the balance of these cost and benefits differently, so that we cannot simply say that a current account surplus is better than a current account deficit.2.”For an investment in a foreign-currency-denominated financial asset, part of the return comes from the asset itself and part from the foreign currency.” Do you agree or disagree? Explain.Agree. As an investor, I think of my wealth and returns from investments in terms of my own currency. When I invest in a foreign-currency-denominated financial asset, I am buying both the foreign currency and the asset. Part of my overall return comes from the return on the asset itself—for instance, the yield or rate of interest that it pays. The other part of my return comes from changes in the exchange rate value of the foreign currency. If the foreign currency increases in value while I am holding the foreign asset, the value of my investment increases, and I have make an additional return on my investment.。