MGEA05H3 Chapter Notes - Chapter 35: Foreign Exchange Market, Reserve Currency, Canadian Dollar

• School: UTSC
• Department: Economics for Management Studies
• Course: MGEA05H3
• Professor: Michael H O

Document Summary

Chapter 35: exchange rate and the balance of payments. Records payments and recipes arising from trade in goods and services and from interest and dividends that are earned on assets owned in one country and invested in another. Trade account: records payments and receipts arising from the import and export of goods and services. Records payments and receipts that represent income on assets (interest, dividends) Credit item = receipt of money for canada. Debit item = payment of money for canada. Records payments and receipts arising from international transactions in long-term and short- term assets (bonds, shares of companies, real states, and factories) Credit item = capital inflow = sale of assets by canada to foreigners. Debit item = capital outflow = purchase of assets by canada from foreigners. Direct investment: purchase or sale of assets that alter the legal control of those assets, such as when a controlling interest of a company is purchased.