Currency and Exchange Rates

Front

What is an exchange rate?

Back

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

Front

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

Back

It can be exchanged for more of a lesser foreign currency

Front

How is an exchange rate determined in the money market?

Back

The forces of supply and demand

Front

Why do changing exchange rates help one country and hurt the other?

Back

One side loses purchasing power and the other gains it

Front

How does inflation rate affect currency value/exchange rate?

Back

Higher inflation leads to depreciating currency & vice versa

Front

An appreciation of a country's currency means that for foreigners this country's goods are

Back

More expensive

Front

When a currency that is fixed against another currency increases in value, it _____________________ and when it falls in value it _____________________.

Back

revalues/devalues