Econ 333 Nov 25 Ch 14

Econ 333 Nov 25 Ch 14 - Exchange Rates: Supply and Demand...

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Exchange Rates: Supply and Demand Chapter 14
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Price of Money Supply/Demand for Goods Does supply/demand rule for gasoline? Oil? Exchange rates? Price changes often—like company stocks, futures markets Up/Down-Depreciate/Appreciate Depreciate=worth less/appreciate=worth more Exchange rate up/down can be unclear
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Potential Confusions Depreciate/Appreciate Depreciate=worth less (dollar buys fewer Euros) appreciate=worth more (dollar buys more yen) Up/Down Not Clear Exchange rate up can mean $/yen rise =depreciation OR $ buys more yen ($/yen fall=appreciation) Read with caution/don’t write up/down
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Reported Exchange Rates (Foreign currency)/$ versus $/(Foreign currency) http://money.cnn.com/data/currencies/ U.S. Dollar to Foreign Currency ($1= ): $1 = 96 yen If this rises, then the $ is appreciating Foreign Currency to U.S. Dollars : about 1 cent=1 yen If this rises, then the $ is depreciating
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Econ 333 Nov 25 Ch 14 - Exchange Rates: Supply and Demand...

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