Exchange Rates

Exchange Rates - Econ 1110, Spring 2008, Professor Te 1...

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Unformatted text preview: Econ 1110, Spring 2008, Professor Te 1 Lecture #20 Exchange Rates Econ 1110, Spring 2008, Professor Te 2 Nominal Exchange Rate Number of Units of Foreign Currency that Can Be Purchased with One Unit of Home Currency Exchange Rate Regimes Flexible (floating) Fixed Currency board European monetary unification - Euro Econ 1110, Spring 2008, Professor Te 3 Real Exchange Rate Number of Foreign Goods that Can Be Purchased with One Home Good e e P P nom For = bottle euros bushel dollars dollar euros bushel bottles = Econ 1110, Spring 2008, Professor Te 4 Changes in Exchange Rate Exchange Rate System Increase Value of Currency Decrease Value of Currency Flexible Exchange Rates Appreciation Depreciation Fixed Exchange Rates Revaluation Devaluation Econ 1110, Spring 2008, Professor Te 5 Real vs. Nominal Exchange Rate Movements P eP e For nom = ( 29 P P eP eP e e For For nom nom - = - + = For nom nom e e e e Econ 1110, Spring 2008, Professor Te 6 Inflation & Changes in Real & Nominal Exchange Rates 1973-II to 2005-IV-6-4-2 2 4 6 8 10 1973 1976...
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This note was uploaded on 04/15/2008 for the course ECON 1110 taught by Professor Tedloch-temzelides during the Spring '08 term at Pittsburgh.

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Exchange Rates - Econ 1110, Spring 2008, Professor Te 1...

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