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quiz3 - Quiz 3 Chapter 3"the value of the dollar can be...

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Quiz 3- Chapter 3 “the value of the dollar” can be used in 2 different contexts: 1. In terms of the dollar price of goods in America 2. Compared to another currency as determined by the exchange rate Where do you go to exchange your $’s for the local currency? Foreign Exchange Market (a.k.a. Spot Market) Exchange rates are quoted in 2 ways: Direct : Home currency how much of the home currency it costs to buy Foreign currency 1 unit of the foreign currency (ex. $/?) Indirect : Foreign currency how many units of the foreign currency received Home currency for 1 unit of the home currency (ex. ?/$) Using a credit card or debit card at an ATM machine is an alternative to banks and exchange booths as a source of the local currency Generally, the exchange rate on credit card/debit card purchases is much better than converting cash or travelers’ checks When you exchanged money in a foreign country, was there a single price for the foreign currency? NO!
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