GEB 3373 Lecture Notes - Lecture 34: Demand Curve, Economic Equilibrium, United States Dollar

23 views3 pages

Document Summary

Facilitates currency conversion, allowing firms to conduct trade more efficicenly across national boundaries. Facilitates international investment and capital flows exchange-market to convert foreign funds into currency they need. Changes in exchange rates affect consumer prices, markets where they shop, a(cid:374)d fir(cid:373)s" profits. > firms can find low-cost finnciing in global capital markets and then use foreign. Foreig(cid:374) e(cid:454)(cid:272)ha(cid:374)ge: a (cid:272)o(cid:373)(cid:373)odit(cid:455) (cid:272)o(cid:374)sisti(cid:374)g of (cid:272)urre(cid:374)(cid:272)ies issued (cid:271)(cid:455) (cid:272)ou(cid:374)tries other tha(cid:374) o(cid:374)e"s own. Like the prices of other commodities, the price of foreign exchange (foreign currencies) is determined by supply & demand. > this is because we have flexible exchange rate system (not fixed) Is deri(cid:448)ed de(cid:373)a(cid:374)d (cid:271)e(cid:272)ause de(cid:373)a(cid:374)d for (cid:455)e(cid:374) is deri(cid:448)ed fro(cid:373) foreig(cid:374)ers" desire to (cid:271)u(cid:455) japa(cid:374)ese goods, services, and assets. To buy japanese stuff, foreigners need yen. If no one wants to buy japanese stuff, no one wants japanese yen. Currency demand curve is downward sloping (like other demand curves)

Get access

Grade+20% off
$8 USD/m$10 USD/m
Billed $96 USD annually
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
40 Verified Answers
Class+
$8 USD/m
Billed $96 USD annually
Class+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
30 Verified Answers

Related Documents