AP Macroeconomics / Unit 6: Open Economy: International Trade and Finance
6.2 Exchange Rates
Notes
The exchange rate is the price of one currency in terms of another.
- Appreciation: a currency buys more foreign currency. Depreciation: it buys less.
Practice
The euro goes from 1.10 dollars to 1.20 dollars. The euro has:
It buys more dollars.
Then the dollar has, relative to the euro:
Opposite.
A weaker dollar makes US exports:
More foreign demand.
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