CH 9 - CH9ExchangeRate 00:53 CurrenciesandExchangeRates

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CH 9 Exchange Rate 00:53 Currencies and Exchange Rates  When people buy things from other countries, they use currency of that country  Foreign currency- money of other countries regardless of whether that money is in  form of notes, coins, or bank deposits Foreign Exchange Market  Foreign exchange market- market in which currency of one country is  exchanged for currency of another  Market is never closed Made up of thousands of people  Exchange Rates  Exchange rate- price at which one currency exchanges for another  currency in foreign exchange market  Exchange rate  fluctuates: rise is called appreciation of dollar, fall is  depreciation of dollar  Change might not change what we really pay for our imports and earn  from our exports bc prices of goods/services might change to offset the  change in value of dollar  Need to distinguish between nominal exchange rate and real exchange 
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This note was uploaded on 11/14/2011 for the course ECO 202 taught by Professor Normmiller during the Spring '08 term at Miami University.

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CH 9 - CH9ExchangeRate 00:53 CurrenciesandExchangeRates

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