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Includes quizzes.

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Real Exchange Rates | Marginal Revolution University

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Thanks to our awesome community of subtitle contributors, individual videos in this course might have additional languages. More info below on how to see which languages are available (and how to contribute more!).

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Define the exchange rate, currency appreciation, and currency depreciation.

Explain how currencies are valued relative to one another.

Calculate the value of one currency relative to another.

Define the foreign exchange market, demand for currency, and supply of currency.

Explain (using graphs as appropriate) the relationship between the exchange rate and the quantity of currency demanded (supplied).

Define (using graphs as appropriate) the equilibrium exchange rate.

Explain (using graphs as appropriate) how exchange rates adjust to restore equilibrium in the foreign exchange market.

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The interaction of buyers and sellers exchanging the currency of one country for the currency of another determines the equilibrium exchange rate in a flexible exchange market and influences the flow of goods, services, and financial capital between countries.

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In the foreign exchange market, one currency is exchanged for another; the price of one currency in terms of the other is the exchange rate.

If one currency becomes more valuable in terms of the other, it is said to appreciate. If one currency becomes less valuable in terms of the other, it is said to depreciate.

The demand for a currency in a foreign exchange market arises from the demand for the country’s goods, services, and financial assets and shows the inverse relationship between the exchange rate and the quantity demanded of a currency.

The supply of a currency in a foreign exchange market arises from making payments in other currencies and shows the positive relationship between the exchange rate and the quantity supplied of a currency.

In the foreign exchange market, equilibrium is achieved when the exchange rate is such that the quantities demanded and supplied of the currency are equal.

Disequilibrium exchange rates create surpluses and shortages in the foreign exchange market. Market forces drive exchange rates toward equilibrium.

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APMac Unit 6 Lesson 2 - Exchange Rates and the Foreign Exchange Market

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Start studying APMac Unit 6 Lesson 2 - Exchange Rates and the Foreign Exchange Market. Learn vocabulary, terms, and more with flashcards, games, and other study tools.

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1. Can you draw the foreign exchange graph for a country’s currency?

2. What is appreciation and how is it different than depreciation?

3. What are the main factors that will cause the appreciation or depreciation of a currency?

4. What is the difference between a floating rate and a managed rate?

5. What is the difference between revaluation and devaluation when discussed a fixed exchange rate?

6. How does a persistent financial (capital) account surplus affect a country’s exchange rate?

7. How does appreciation of a currency (as well as depreciation) affect a country’s imports and its exports?

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KAL draws... predatory pricing in business competition

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Dumping: when a firm floods a market with cheap goods to undercut the competition. Illustrated by our cartoonist KAL. Click here to subscribe to The Economist on YouTube: http://econ.trib.al/rWl91R7 Daily Watch: mind-stretching short films every day of the working week.

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Mr. Clifford explains the market for foreign exchange and national currencies. If you want more practice watch this video: https://www.youtube.com/watch?v=9DVYVfI81R8

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Foreign Exchange Practice- Macro Topic 6.4 and 6.5

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Floating vs. Fixed Exchange Rates- Macroeconomics 5.4

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Float it or fix it? Mr. Clifford expalins the difference between floating and fixed exchange rates and how countries peg the value of their currency to another currency. Make sure to watch this video first: https://www.youtube.com/watch?v=9DVYVfI81R8

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Macro 5.5- Foreign Exchange and Real Interest Rates

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Mr. Clifford's app is now available at the App Store and Google play. His mobile app is perfect for students in AP macroeconomics or college introductory macro courses. It is designed to help you ace the exam, final, or AP test. The app includes over 60 new economics videos that are not available on YouTube.