AP®︎ Macroeconomics: Topic 6.2 Flashcards

The price of one country's currency in terms of another country's currency.

A rise in a currency's value relative to another; a fall in its value relative to another.

Two countries' exchange rates are inverses, so one currency's appreciation means the other's depreciation.

A system where currency values change based on supply and demand in foreign exchange markets.

The market where buyers and sellers trade one nation's currency for another nation's currency.

Convert values by multiplying an amount in one currency by the quoted exchange rate.

Greater preference for another country's goods raises demand for its currency and increases its value.

Higher income in one country increases imports, raising demand for foreign currency.

Higher inflation makes domestic goods relatively expensive, reducing demand for that country's currency.

Expectations about future currency values cause investors to buy or sell currencies now.

The market price where quantity of a currency demanded equals quantity supplied.