The following is a guide to some of the terms and topics that are apt to be discussed during this week's economic summit in Tokyo.
Balance of Payments. The measure of the inflow and outflow of a country's transactions with the rest of the world for a given period. The measure includes every penny a country and its citizens pay to foreigners and everything foreigners pay into a country -- from exports and imports to insurance premiums to investments. The so-called current account balance does not measure financial transactions, such as stock and investment purchases, but only the payments for exports and imports, services and transfers. A country that persistently spends more than it takes in, borrowing the difference from abroad, theoretically will see the value of its currency deteriorate.
Balance of Trade. The record of the value of a country's export of physical goods -- from grain to computers -- offset by the value of its imported goods. The United States in 1985 bought nearly $150 billion more in goods from foreigners than it sold them. It thus had a trade deficit of that amount.
Exchange Rate. The value of one currency in terms of another. Just as chocolate bars have a dollar price, so do West German marks, Japanese yen or Brazilian cruzados. Among the major currencies, exchange rates are free to fluctuate and their relative values are determined in a loosely knit worldwide market of buyers and sellers. For example, a U.S. importer of Japanese radios will need to purchase yen in order to pay the Japanese manufacturer. Similarly, a Japanese investor who wants to buy U.S. stocks or bonds will need to buy dollars to pay for them. The value of a currency is a major determinant of a country's health. If the dollar appreciates in terms of the yen, for instances, it will make U.S. exports to Japan more expensive because it takes more yen to buy the same amount of dollars. Because volatile swings in currency values can distort trade and investment, some have called for a return to a system similar to the one that prevailed from 1945 until 1971, in which governments jointly determined their exchange rates (sometimes called parities) and agreed to intervene in foreign exchange markets to keep currency values within a range centered around the formal exchange rate.
Gross National Product. The value of goods and services produced during a given period -- usually a year -- by a nation. Economists and politicians are most concerned with "real" GNP -- the value of output after the effect of inflation is removed. Real GNP is supposed to give the notion of the increase in the volume of a nation's goods and services. Rising "real" GNP is a rough indication that a country is getting more prosperous, at least if GNP increases faster than the population growth rate. It can happen that real GNP falls even though the current price of all the goods and services an economy produces is higher than the year before.
Group of Five. The term used to refer to the finance ministers of the five major industrial nations -- the United States, Britain, France, Germany and Japan. The ministers often meet to discuss economic policy and cooperation.
Inflation. A situation in which prices taken as a whole are rising. During periods of inflation, the prices of individual goods may fall, just as during a period of falling prices (deflation) an individual price may rise.
International Monetary Fund. A multilateral agency, founded in 1945, to lend money to countries having short-term difficulties paying their international bills. The agency makes loans in return for commitments from the borrowing nations to reform their economies in order to earn more foreign currencies and reduce their need for foreign loans. One common way to do this is to produce more commodities for export and cut back on imports.
Intervention. The entrance of central banks into foreign currency markets as buyers or sellers in order to influence the price of a currency or group of currencies.
Reserves. Assets, chiefly foreign currencies, that a country can use to settle international bills. The dollar is the world's most widely used reserve currency.
Target Zones. A compromise between floating and fixed exchange rates. Governments would agree to act to keep the value of their currencies within a certain range, or target zone.