© 2011 South-Western | Cengage Learning Foreign Exchange and International Finance 7-1 7-1Money Systems Around the World 7-2 7-2Foreign Exchange And Currency.

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Presentation transcript:

© 2011 South-Western | Cengage Learning Foreign Exchange and International Finance Money Systems Around the World Foreign Exchange And Currency Controls Currency Transactions Between Nations CHAPTER 7

INTERNATIONAL BUSINESS, 4e CHAPTER © 2011 South-Western | Cengage Learning SLIDE 2 7 LESSON 7-1 Money Systems Around the World GOALS Explain the role of money and currency systems in international business. Identify factors that affect the value of currency.

INTERNATIONAL BUSINESS, 4e CHAPTER © 2011 South-Western | Cengage Learning SLIDE 3 7 Money and Currency Systems What is money? Acceptability Scarcity Durability Divisibility Portability Why is money used? Medium of exchange Measure of value Store of value

INTERNATIONAL BUSINESS, 4e CHAPTER © 2011 South-Western | Cengage Learning SLIDE 4 7 Foreign Exchange Balance of payments Economic conditions Money supply and demand Risk Inflation Political Stability

INTERNATIONAL BUSINESS, 4e CHAPTER © 2011 South-Western | Cengage Learning SLIDE 5 7 LESSON 7-2 Foreign Exchange and Currency Controls GOALS Discuss foreign exchange activities. Describe the main activities of the World Bank and the International Monetary Fund.

INTERNATIONAL BUSINESS, 4e CHAPTER © 2011 South-Western | Cengage Learning SLIDE 6 7 Foreign Exchange Activities Changing exchange rates The foreign exchange market Foreign exchange controls

INTERNATIONAL BUSINESS, 4e CHAPTER © 2011 South-Western | Cengage Learning SLIDE 7 7 Japanese Yen Per U.S. Dollar

INTERNATIONAL BUSINESS, 4e CHAPTER © 2011 South-Western | Cengage Learning SLIDE 8 7 International Financial Agencies The World Bank International Monetary Fund (IMF) Analyze economic situations Suggest economic policies Provide loans

INTERNATIONAL BUSINESS, 4e CHAPTER © 2011 South-Western | Cengage Learning SLIDE 9 7 LESSON 7-3 Currency Transactions Between Nations GOALS Discuss payment methods and financial sources for international business transactions. Explain other payment methods and financial documents used in international trade.

INTERNATIONAL BUSINESS, 4e CHAPTER © 2011 South-Western | Cengage Learning SLIDE 10 7 International Financial Transactions Foreign trade payment methods Cash in advance Letter of credit Sale on account Sources of international financing Short-term financing Long-term financing

INTERNATIONAL BUSINESS, 4e CHAPTER © 2011 South-Western | Cengage Learning SLIDE 11 7 Other Payment Methods and Financial Documents Promissory note Bill of exchange Electronic funds transfer (EFT) Commercial invoice Insurance certificate

INTERNATIONAL BUSINESS, 4e CHAPTER © 2011 South-Western | Cengage Learning SLIDE 12 7 A Commercial Invoice