ECON 1009 Lecture Notes - Lecture 2: Foreign Exchange Market, Floating Exchange Rate, Commodity Currency
25 Jan 2023
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Course learning outcome 4 is for students to be able "to describe how the foreign exchange market works, identify the main determinants of movements in floating exchange rates, and to relate exchange rate policy to monetary policy". Course learning outcome 5 is for students to be able "to identify and describe futures and options contracts, and to explain the main determinants of the value of an options contract". Our objectives this week are for students to be able to meet both course learning outcomes 4 and 5. In both cases, this will involve drawing on learning objectives achieved earlier in the course, as well as additional material covered in week 11. To introduce exchange rates as the price of one currency in terms of another. To define the commodity currency, the terms currency, an indirect quote and a direct quote. To describe the consequences of currency depreciation and appreciation,
