Lec_25_exchange

# Lec_25_exchange - Important events March 16-18 Monday March...

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1 Important events March 16-18 Monday, March 16: 11:00 a.m. - 1:00 p.m.-- Office hours for TA Cynthia Wu in Sequoyah 234 7:30 p.m.-- TA Aaron Schroeder on Jeopardy Tournament of Champions on NBC TV Tuesday, March 17: 9:00 a.m. - 11:00 a.m.-- Office hours for TA Jaime Thomas in Sequoyah 238 1:30 - 3:20 p.m.-- Office hours for Professor Hamilton in Sequoyah 231 Wednesday, March 18: 8:00 - 11:00 a.m.-- Final exam 25% chapters 7 and 9-12 75% chapters 13-15 and 27 Chapter 27. Exchange Rates and the Open Economy A. Nominal exchange rates • In much of Europe, you’d make your purchases not with dollars but rather with euros • One euro would cost you about \$1.26 • Not all of Europe uses the euro • For example, the United Kingdom uses the British pound, worth about \$1.38 In Japan, you might pay for your purchase with a 100 yen coin, which would cost you about \$0.98 In South Korea, the 10,000 won note is worth about \$6.47

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2 Definition: The nominal exchange rate is the rate at which two currencies can be traded for each other Sometimes we simply refer to this magnitude as the exchange rate Note that we could express any exchange rate two ways: • you pay 1.26 U.S. dollars to get 1 euro • you pay 0.79 euros to get 1 U.S. dollar 10 . 7 9 e u r o s 1.26 dollars/euro dollar = Nominal exchange rates for the U.S. dollar 0.000647 \$/won South Korea (won) 0.0098 \$/yen Japan (yen) 1.38 \$/pound United Kingdom (pound) 1.26 \$/euro European union (euro) U.S. dollars per foreign currency Country (currency) Nominal exchange rates for the U.S. dollar 1544 won/\$ 0.000647 \$/won South Korea (won) 102 yen/\$ 0.0098 \$/yen Japan (yen) 0.72 pounds/\$ 1.38 \$/pound United Kingdom (pound) 0.79 euros/\$ 1.26 \$/euro European union (euro) Foreign currency per U.S. dollar U.S. dollars per foreign currency Country (currency)
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Lec_25_exchange - Important events March 16-18 Monday March...

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