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Today’s Schedule – 12/13 2 International Trade Presentations Exchange Rates PPT Activity: Exchanging Classwork for Goods Homework – Read 19.1 – Study Ch.

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Presentation on theme: "Today’s Schedule – 12/13 2 International Trade Presentations Exchange Rates PPT Activity: Exchanging Classwork for Goods Homework – Read 19.1 – Study Ch."— Presentation transcript:

1 Today’s Schedule – 12/13 2 International Trade Presentations Exchange Rates PPT Activity: Exchanging Classwork for Goods Homework – Read 19.1 – Study Ch. 18 Quiz

2 Exchange Rates Value of a foreign currency in terms of the home nation’s currency Can’t use the US Dollar everywhere!!

3 Calculating Exchange Rates Example: – Staying in a hotel in Mexico costs 500 pesos/night – Current exchange rate is 1 US Dollar = 10 pesos – 500 pesos/10 pesos = $50

4 Calculating Exchange Rates Reverse Example: – Staying in a hotel in Mexico and don’t want to spend more than US$70 a night – Current exchange rate is 1US Dollar = 9 Pesos – 70 x 9 = $630 Pesos

5 Strong and Weak Currencies When the value of a currency increases or appreciates, it becomes stronger – Ex: Then: 1 US Dollar = 100 Yen; Now: 1 US Dollar = 110 Yen Dollar has appreciated

6 Strong and Weak Currencies When the value of a currency decreases or depreciates, it becomes weaker – Ex: Then: 1 US Dollar = 100 Yen; Now 1 US Dollar = 90 Yen

7 Exchange Rate Systems Most countries operate on a flexible exchange rate system where exchange rates are determined by S & D Some use a fixed exchange rate – Often a new/struggling economy will fix its exchange rate to a stronger currencies (i.e. Pesos and US Dollar)


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