| A | B |
|---|
| Purchasing Power Party (PPP) | prices of tradable goods will tend to equalize across countries |
| Law of One Price | relative price of any single good btw countries, expressed in each c's currency, representative of proper or appropriate xchg rate value |
| Foreign Currency Exchange Rate | price of any country's currency in terms of another country's currency |
| Direct Exchange Quotation | quotation that specifies amt of home-country currency needed to purchase one unit of foreign |
| Indirect Exchange Quotation | quotation that specifies units of foreign currency that could be purchased w/1 unit of home currency |
| Spot Exchange Rates | contracts that provide for 2 parties to xchg currencies w/delivery in 2 bus. days |
| Forward Exchange Rates | contracts that provide for 2 parties to xchg currencies on future date at agreed-upon xchg rate |
| European Terms | quoting currency rate as country's currency against US$ |
| American Terms | quoting currency rate as US$ against another country's currency |
| Cross Rates | xchg rate quotes that do not include US$ as one of the two currencies quoted |
| Triangular Arbitrage | xchg of currency for 2nd, the 2nd for 3rd and 3rd for 1st in order to make profit |
| Gold Standard | std. for int'l currencies in which values were stated in terms of gold |
| Bretton Woods Agreement | 1944 - among finance ministers of 45 W. nations to establish system of fixed xchg rates |
| Direct Intervention | process that govts used in '70s if wished to alter current val. of currency; buying or selling own currency in market, using reserves of other major currencies |
