a) Exchange rates

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9 Terms

1
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  • exchange rate


  • the price of one unit of currency in terms of another currency


2
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  • floating exchange rate


  • when the value of the currency

  • is determined by the supply and demand for it

  • on the foreign exchange market


3
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  • appreciation


  • when the value of the currency increases due to excess demand


4
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  • depreciation


  • when the value of the currency decreases due to excess supply


5
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  • fixed exchange rate


  • when the value of the currency is pegged to another currency


6
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  • parity


  • when two currencies have an equal value


7
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  • revaluation


  • when the central bank changes the peg to increase the value of the currency


8
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  • devaluation


  • when the central bank changes the peg to decrease the value of the currency


9
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  • managed exchange rate


  • when the central bank determines the preferred currency value

  • and allows the currency to fluctuate around a range of the value