Vocabulary
This is the price of one currency in terms of another currency.
What is Exchange Rate?
If 1 U.S. dollar changes from 18 pesos to 20 pesos, the dollar did this.
What is appreciated?
If 1 USD = 20 pesos, then $2 equals this many pesos.
What is 40 Pesos?
When foreigners want to buy more U.S. goods, demand for this currency rises.
What is the U.S. Dollar?
When a currency appreciates, exports usually become more or less expensive to foreigners?
What is more expensive?
This happens when a currency becomes more valuable relative to another currency.
What is appreciation?
If 1 USD goes from 12 euros to 10 euros, the dollar has done this.
What is depreciated?
If 1 USD = 20 pesos, then $4 would equal this many pesos.
What is 80 pesos?
Higher real interest rates in a country usually increase demand for its currency because of this.
What is financial Capital Inflow?
When a currency depreciates, imports become more or less expensive for domestic consumers?
What is more expensive?
When a currency becomes less valuable relative to another currency.
What is depreciation?
If 1 U.S. dollar changes from 150 yen to 140 yen, the dollar did this.
What is depreciated?
If 1 USD = 0.50 pounds, then $10 equals this many pounds.
What is 5 pounds?
If income rises in the United States, Americans usually buy more imports, increasing the supply of this currency in FOREX markets.
What is the U.S. dollar?
When a currency appreciates, this component of aggregate demand usually falls.
What is net exports?
If one currency appreciates in a currency pair, this must happen to the other currency.
What is it depreciates?
If 1 USD buys fewer yen than before, U.S. travelers in Japan will find Japan becoming this.
What is more expensive?
If 1 USD = 0.80 euros, then 1 euro is worth about this many U.S. dollars.
What is 1.25 U.S. dollars?
If U.S. inflation is higher than foreign inflation, U.S. goods become relatively more expensive, and demand for the dollar will likely do this.
What is decrease?
If the dollar depreciates, U.S. goods become cheaper to foreigners, so this usually happens to U.S. exports.
What is exports increase?
This term describes the value of one currency calculated by flipping the exchange rate, such as finding USD from euros.
What is the reciprocal exchange rate?
If 1 USD changes from 20 pesos to 16 pesos, the peso has done this relative to the dollar.
What is more appreciated?
If 1 USD = 10 pesos and 1 USD = 2 euros, then 1 euro equals this many pesos.
What is 5 Pesos?
This determinant of exchange rates refers to investors moving money toward countries with higher real returns.
What is relative interest rates?
A depreciation of the domestic currency tends to increase net exports and therefore usually causes this change in aggregate demand.
What is aggregate demand increases?