Fill in the gaps in the passage with words given below in brackets. The initial letter of the words is provided

1. When a country imports goods, it spends its currency abroad. When a country exports goods, it is paid in foreign c............... The difference between the money a country earns for goods and the amount it s...............on goods is called its balance of trade (or t........... balance.) Countries also trade abroad in things like insurance, tourism, foreign investment etc. which are known as invisible imports and e..............

When a country receives money from abroad for the things other than goods, the transaction is called an I..............export. When a country s............money abroad on things other than goods, the t...............is called an I.............i............ The difference between the total amount of money a country s.............and the total a...............it e.............is its b..............of payments, (amount, balance, currency, earns, exports, invisible, invisible, import, spends, spends, spends, trade, transaction)

2.If a country earns more than it s..., it has a favorable balance of p.............. A f............balance of payments is also called a b..............of payments surplus. If a country spends more than it e................, it has an unfavorable balance of payments. This is also called a b.............of payments deficit, (balance, balance, earns, favorable, payments, spends)

3.In order for international t..............take place, countries have to buy and sell foreign c............. This is done on the f..............exchange market. The value of a c...............on the foreign exchange m..............changes frequently and the price at which money can be exchanged at a particular time is called the e rate (or r............of exchange.) The changes in the e.............rate are influenced by many political and economic factors.

The v...........of a currency will probably fall, for example, if a country has a large trade balance d............. (currency, currencies/currency, deficit, exchange, exchange, foreign, market, rate, trade, value).

4.The e..............rate can affect the price of exported goods. If the v................of the exporter's c.............falls he will make more profit. On the other hand, if the value of the f.................currency takes a f..........., the exporter may have to raise his prices abroad in order to make a p............... Alternatively the exporter can take out forward exchange cover. Forward exchange c..............is a form of insurance. The exporter arranges to sell f.............(e.g. in three months time) at an agreed r............of exchange the foreign c.............he will receive from the sale of goods. This quads the exporter against losing money if the foreign currency falls in v...........(cover, currency, currency, exchange, fall, foreign, forward, profit, rate, value, value).

Exercise 10