International Economics

TOPIC II: Exchange Rate

1. use supply and demand analysis to determine exchange rates.
2. identify transactions that determine the demand for and supply of foreign exchange.
3. predict how specific events will change the exchange rate.
4. evaluate how an exchange rate will affect trade and prices internationally.
5. identify governmental policies which influence exchange rates.

KEY CONCEPTUAL QUESTIONS

1. How can supply and demand curves be used to represent foreign exchange market activities?
2. How do changes in rates of real economic growth, and changes in interest rates affect exchange rates?
3. What actions can governments take to affect exchange rates?