ECO100Y5 Chapter Notes - Chapter 35: Demand Curve, Comparative Advantage, Economic Equilibrium
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ECO100Y5 Full Course Notes
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Chapter 35- exchange rates and the balance of payments. 35. 1 the balance of payments: balance of payments account- a summary record of a country"s transactions with the rest of the world, including the buying, and selling of goods, services, and assets. In both cases, as always, the balance of payments is actually in balance. Canadian exports: source of supply of foreign exchange is foreigners who wish to buy. Canadian-made g/s; each potential buyer wants to sell its own currency in exchange for canadian dollars that it can then use to purchase canadian goods/services. Asset sales: capital inflows: to buy canadian assets, holders of foreign currencies must first sell their foreign currency and buy canadian dollars; when canadians sell assets to foreigners, there is a capital inflow to canada. Reserve currency: firms, banks, and governments often accumulate and hold foreign exchange reserves, just as individuals maintain savings accounts; these reserves may be in several different currencies.
