macro lecture 10 (exchange rates)
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18 Terms
Exchange Rates Intro
Nominal Exchange Rates
Flexible Exchange Rates Systems
What Determines the Nominal Exchange Rate
Demand for AUD
The value of a currency is determined in foreign exchange markets
International trade requires foreign currency
International financial transactions require foreign currency These motives determine demand and supply for currencies
Supply for AUD
Real Exchange Rates
What Determines Real Exchange Rate
Purchasing Power Parity PPP
Monetary Policy and Exchange Rates
Fixed Exchange Rates
UNDERVALUED Fixed Exchange Rates Diagram
OVERVALUED Fixed Exchange Rates Diagram
Speculative Attacks on Overvalued Currencies
Why Fixed Exchange Rates are Necessary
Evaluation of Fixed Exchange Rates
Trilemma (Exchange Rates)
