Exchange Rate and Market Conditions

The video tutorial covers exchange rates, including how to calculate them and understand currency appreciation and depreciation. It explains the impact of supply and demand on currency markets, introduces free floating exchange rates, and provides problem-solving examples related to exchange rates and equilibrium.

What is the exchange rate if one dollar equals two reals?

• 1 real = 0.25 dollars

• 1 real = 1 dollar

• 1 real = 2 dollars

• 1 real = 0.5 dollars

If the dollar appreciates against the real, what happens to the purchasing power of the dollar?

• It becomes unpredictable

• It increases

• It remains the same

• It decreases

How do you find the exchange rate of one real to four dollars?

• Multiply both sides by four

• Divide both sides by four

• Add four to both sides

• Subtract four from both sides

What does it mean when the price is above equilibrium in a supply and demand graph?

• There is a shortage

• There is a surplus

• Supply equals demand

• Demand exceeds supply

In a free-floating exchange rate system, what determines the exchange rate?

• Supply and demand

• International agreements

• Government intervention

• Fixed rates

If one dollar equals six yen and equilibrium is at seven yen, what must happen to the dollar?

• It must appreciate

• It must be fixed

• It must remain constant

• It must depreciate

What happens when supply is greater than demand at a given price point?

• Prices increase

• A surplus occurs

• Equilibrium is reached

• A shortage occurs

If the current exchange rate is above equilibrium, what is likely to happen?

• The currency will be fixed

• The currency will remain stable

• The currency will depreciate

• The currency will appreciate

What is the result when demand is greater than supply at a certain price?

• A surplus

• A shortage

• Equilibrium

• Price stability

In a scenario where one peso equals 0.2 real and equilibrium is at 0.18 real, what is the market condition?

• Surplus

• Price stability

• Shortage

• Equilibrium