Textbook Notes (369,133)
Canada (162,403)
POLI 243 (70)
Chapter 8

Political Science Chapter 8 Summary.docx

2 Pages

Political Science
Course Code
POLI 243
Mark Brawley

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Political Science Chapter 8 Summary Characteristics of Monetary Orders - Money serves as a measure, medium of exchange and store of value - Facilitates transactions - Gov’t provides and manages supply of money - We look at: exchange rates, nature of reserves and convertibility of capital (nature of links between capital markets) - Exchange rates are price of one currency in terms of another; can be fixed, left up to determination by market or somewhere in between - Reserves: 2 types—commodity (monetary reserve b/c some high intrinsic value is recognized internationally) and national currency and possibly created by international agency - Nature of controls on financial connections/ capital flows; how open or closed international financial system is. Indicates how well financial markets are integrated - Successful monetary policy has 4 integrated parts: medium of international exchange, adequate ties between nations’ financial institutions and some method of managing balance of payments and must be management of international monetary system Exchange Rates: Fixed vs. Floating - Less money= higher price - Monetary policy refers to how gov’t institutions manipulate supply of currency to make the interest rate rise or fall, thus making it easier/ more difficult to borrow money The balance of payments - Refers to nation’s accounting records - Flow of goods and services and funs broken into various subcategories. On broadest level, these are divided between current account and capital account - Net changes in country’s claims on foreigners are handled in current account, while capital account records borrowing, selling or purchasing of assets - Capital account tracks investment being placed into or received from another country Balance of Payment Adjustment - People are interested in balance of payment b/c they want to know how much their country is earning from or owes its trading partners - Balance of payment adjustment is how countries settle their bills - If it owes money by importing more than exporting it can pay out monetary reserves or increas
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