chapter 10 exchange rates and exchange rate systems
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Chapter 10
Exchange Rates and Exchange Rate Systems
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Examples of Exchange Rates
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FIGURE 10.1 The Demand Curve for Foreign Exchange
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FIGURE 10.2 The Supply of Foreign Exchange
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FIGURE 10.3 Supply and Demand in the Foreign Exchange Market
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FIGURE 10.4 An Increase in Demand for British Pounds
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FIGURE 10.5 An Increase in the Supply of British Pounds
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Exchange Rates in the Long Run: Purchasing Power Parity
• Purchasing power parity: the equilibrium value of an exchange rate is at the level that allows a given amount of money to buy the same quantity of goods abroad as it will buy at home
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FIGURE 10.6 The Effects of an Increase in Home’s Interest Rate
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Determinants of an Exchange Rate: Summary
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FIGURE 10.7 Fixed Exchange Rates and Changes in Demand
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FIGURE 10.8 Selling Reserves of Pounds to Counter a Weakening Dollar
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