Chapter 16: Foreign Exchange Markets

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Last updated 9:17 PM on 12/6/25
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17 Terms

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Dollarize

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Foreign Exchange Market

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Soft peg

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Hard peg

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Appreciating

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Depreciating

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Speculation

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Purchasing power parity

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Who are the groups of individuals that interact with the foreign exchange market?

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Why is the U.S dollar considered a benchmark currency?

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What are the factors that will shift the foreign exchange market?

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Who benefits from a stronger U.S dollar versus who benefits from a weaker dollar?

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How do changes in factors that shift the foreign exchange market impact the value of currency? Show it graphically.

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How does speculation work, and how do people incur loss of prodigy when conducting speculation?

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What are some real- world complications that keep purchasing power parity from providing a complete explanation of exchange rates?

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How does the foreign exchange market correct itself over time as currencies appreciate or depreciate?

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How do changes in monetary policy influence the foreign exchange market?