Exchange Rates

What is Exchange Rate?

• The price of goods between two countries

• Conversion of a nation's currency to another

• The changes in currency

• The value of US dollars to other countries

What type of Exchange Rates do most countries have?

• Fixed Exchange Rate

• Floating Exchange Rate

What is the difference between fixed exchange rate and floating exchange rate?

• Market 1 vs. Market 2

• Changing vs. Not changing

• Appreciation of Supply vs. Depreciation of Demand

• By the Government vs. Foreign Exchange Market

If US dollar were to appreciate in relation to the Euro, what effect would this have?

• US consumers can buy more European goods and services for fewer dollars

• US consumers can buy more US goods and services for fewer dollars

• European consumers can buy more US goods and services for fewer dollars

• European consumers can buy more European goods and services for fewer dollars

A countries two major sources of income from international trade are fishing and tourism.

If the country's exchange rate depreciated, what is likely to happen?

• Imported goods would become cheaper

• The price of fish sold as exports would become cheaper

• The market of the country will stop

• Tourists will not go to that country

Change £500 into Australian Dollar

• 0.00352

• 390.63

• 880

• 284.0909

What do you call when the value of currency increases?

• Appreciation

• Depreciation

• Fixed Exchange Rate

• Floating Exchange Rate

What do you call when the value of currency fall?

• Appreciation

• Depreciation

• Fixed Exchange Rate

• Floating Exchange Rate

How is Exchange Rate determined?

• Through supply and demand

• By investors

• By consuming imported products

• By exporting goods

Change £1500 into Canadian Dollars.

• 244,500

• 920.25

• 1229.51

• 1830