ECON 1010 Lecture 7: Chapter 25
Document Summary
Chapter 25 : the exchange rate and the balance of payments. Foreign currency in the foreign exchange market. The foreign exchange market: is the market in which the currency of one country is exchanged for the currency for another. If we want some us dollar we need to give up some of our canada dollars. When the us wants to buy canadian goods and services they need to paying using canadian money. The price at which one currency exchanges for another is called foreign exchange rate. A fall in the value of one currency in terms of another currency is called currency depreciation. A rise in value of one currency in terms of another currency is called currency appreciation. An exchange rate is the price the price of one currency in terms of another. The canadian dollar is demanded and supplied by thousands of traders every hour of every day.