Vocabulary
The price of one nations currency to another's.
What are exchange rates?
Two quantities are affected by exchange rate changes that can cause a change in output, price level, and unemployment.
What are aggregate demand and net exports?
The direction demand curve shifts when there is a decrease in the demand for a currency.
What is the left?
.86 Euro
What is USD to Euro exchange rate?
An increase in value of currency relative to others.
What is appreciation?
The quantity of currency that is being exchanged is on this axis.
The number of demand shifts that affect the FOREX graph.
What is 5?
Government-issued currency that is not backed by a physical commodity, such as gold or silver.
What is fiat money?
The rate at which the quantity of currency demanded equals the quantity supplied in the foreign exchange market.
What is Equilibrium Exchange Rate?
The exchange rate of a currency is the label for this axis of a foreign exchange model.
What is the vertical axis?
Previously, Rojasland and Moneyland have both had 3% interest rates. Rojasland then increases its interest rate to 9%. This is the direction the demand curve for the Rojasland roan will shift in response.
What is the right?
The first currency in a listed pair (e.g. EUR/USD)
What is Base currency?
When a nation’s government or central bank maintains its currency’s value at a set rate relative to another currency.
What is Fixed exchange rate?
A downward slope for currency on a foreign exchange model graph represents this quantity.
What is the demand for that currency?
Rojasland's currency is the roan and Moneyland's currency is the dollar. Rojasland's government decides to sell their currency on the FOREX market. This is what happens to Moneyland dollar.
What is appreciation?
Value of daily foreign exchange transactions in the world? Hint: in Trillion
What is 3 trillion?
The idea that the difference in national interest rates equals the expected change in exchange rates between currencies. Prevents arbitrage in FOREX markets.
What is interest rate Parity?
A upward slope for currency on a foreign exchange model graph represents this quantity.
This is the main type of government policy that affects the FOREX market.
What is monetary policy?
True or false? For the last decade, the U.S. policymakers have followed a strong dollar policy.
What is false?