ECON 3430 Study Guide - Midterm Guide: Purchasing Power Parity, Nominal Interest Rate, Real Interest Rate

• School: York University
• Department: Economics
• Course: ECON 3430
• Professor: Brenda Spotton- Visano

Document Summary

Over a 1/3 of final good/services made in canada are exported. International corporations" profitability & benefits depend on foreign currency. Exchange rate = tool used to measure the price of one currency in terms of another. Nominal exchange rate = rate at which one can exchange the currency of one for another country"s. Depression of currency = reduction in value of one currency relative to another. Cad $ depreciated against us $ = us $ appreciated against the cad $ Ceri (canadian dollar effective exchange rate index) = measures the avg of the changes of the value of cad $ against our six major trading partners. ^it"s an index #, not a price (only useful for measuring amount of change between 2 periods) Real exchange rate = rate at which one can exchange the goods/services from one country for another country"s. ^ real exchange rate = (domestic dollar p) / (foreign dollar p).