HTM 2100 Study Guide - Final Guide: Gross Domestic Product, Fixed Exchange-Rate System, Foreign Exchange Market

• School: University of Guelph
• Department: Hospitality and Tourism Management
• Course: HTM 2100
• Professor: Linda Hunter

Document Summary

Econ*1100 - introductory macroeconomics (adomait) Chapter 35: exchange rates and the balance of payments: chapter 35. 2: the foreign- exchange market. Canadian- dollar price of 1 u. s. dollar (cad/usd) Us- dollar price of 1 cad dollar (usd/cad) Appreciation of the cad = more valuable: a fall in the exchange rate (less money to buy usd) Depreciation of the cad = less valuable: a rise in the exchange rate (more money to buy usd) Supply of foreign exchange (demand for cad) Canadian exports (lumber, engineering services) Asset sales: capital inflows (government bonds, real estate) Reserve currency (accumulate & hold cad; ex. Poland buys more cad because they think it will be worth more) Cad depreciating: euro prices of canadian goods falling, europeans want to buy more. Cad appreciating: euro prices of canadian goods rising, europeans want to buy less, cad depreciates (higher exchange rate) = canadian securities & assets = attractive. Cad depreciating against the euro.