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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's
How many US dollars you can exchange for RMB at Travelex
The price of goods in terms of a foreign currency
According to the table, what is the Euro equivalent of 1 USD?
How is an exchange rate determined in the money market?
The forces of supply and demand
Government/the Federal Reserve Bank
Whatever sellers of goods are willing to take
Investors decide the value of the currency they wish to invest
Why do changing exchange rates help one country and hurt the other?
One side loses purchasing power and the other gains it
Takes money away from one side and gives it to the other
Causes war between the two countries
One country's government introduces tariffs to protect local industries
If the US $ were to appreciate in relation to the Euro, what effect would this have?
European consumers would have more purchasing power in US
US consumers can buy more European goods and services for fewer $
US consumers can buy more English goods and services for fewer $
European tourists to the US will spend more $
How does inflation rate affect currency value/exchange rate?
Higher inflation leads to depreciating currency & vice versa
Increasing inflation leads to more favourable exchange rates
Higher inflation leads to currency appreciation
Lower inflation leads to more favourable exchange rate
If the Mexican Peso depreciates in relation to the Chinese Yuan, how is Mexico affected?
Mexico has less purchasing power in Chinese currency
Mexico benefits from increased purchasing power
Mexico would have more Chinese investors
They would be invaded by China
In 2009 the exchange rate of the Singapore dollar changed from 1.49 = 1 US dollar to 1.43 Singapore dollars = 1 US dollar.
How would this affect the import prices and export prices for Singapore?
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
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
An appreciation of a country's currency means that for foreigners this country's goods are
If the exchange rate is £1 = $1.25, what is $2250 equivalent to in £ pounds?
None of the answers
Select all of the following that will be impacted by a change in exchange rates:
Prices of exports
Costs of imports
None of the answers