e2 Currency Values and Monetary Policy

These flashcards cover key vocabulary and concepts related to currency values, interest rates, and monetary policy.

Exchange Rate

The price at which one currency is exchanged for another.

Appreciation

An increase in the value of a currency relative to other currencies.

Depreciation

A decrease in the value of a currency relative to other currencies.

Supply and Demand

Economic model determining the price of goods and services based on availability and desire.

Higher Interest Rates

Lead to increased demand for a currency due to higher returns.

Lower Interest Rates

Result in decreased demand for a currency due to lower returns.

Monetary Policy

Government policy that controls the money supply and interest rates to influence a nation's economy.

Fixed Exchange Rate

A currency value set at a fixed rate relative to another currency or precious metal.

Floating Exchange Rate

A currency value that changes freely based on market dynamics.

Adjustable Peg

A currency system that maintains fixed rates with allowance for adjustments when necessary.