Exchange rates

What is an exchange rate?

• The rate at which goods are exchanged between two countries

• The price of one nation's currency in terms of another currency

• The price of goods in terms of a foreign currency

• When a nation's balance of trade is in either a surplus or deficit

According to the table, what is the USD equivalent of 1 Australian dollar?

• 1 USD

• 1.3192 USD

• 1.5896 USD

• 1.0283 USD

According to the table, what is the Euro equivalent of 1 USD?

• 1 Euro

• 0.76 Euros

• 0.63 Euros

• 0.97 Euros

What is the increase in the value of a currency?

• Exchange rate

• Recession

• Depreciation

• Appreciation

What does it mean when an economist says a currency is stronger?

• It can be exchanged for more of a lesser foreign currency

• It can be converted to prices in any currency

• There a few things it could buy

• It will buy fewer foreign goods

What is a decrease in the value of a currency?

• Appreciation

• Depreciation

• Inflation

• Absolute advantage

If you are going to visit America and have $2999 to spend, how much currency could you obtain? (1AUD = 0.68USD)

• = 1x 0.68

• = 1 / 0.68

• = 2999 x 0.68

• = 2999 / 0.68

After coming back from America, you have 500 USD left. You want to convert the 500 USD to AUD, how much will you get? (1 AUD = 0.68 USD)

• 500 / 0.68

• 500 x 0.68

• 600 /0.68

• 600 x 0.68

If the AUD were to appreciate in the relation to the USD, what effect would this have?

• Australian imports become cheaper.

• Australian exports become more expensive to American buyers.

• Australian imports become more expensive.

• Australian exports become less expensive to American buyers.

If the AUD were to depreciate in the relation to the USD, it increased level of the external debt which is easured in overseas currencies.

• False

• True