A) Where does the market for foreign currency come from? How does this market work if we use the flexible exchange rate system? Using terms from lecture what happens to both countries currency if there is a shift of supply or demand? There were terms given that are used to describe changes in currency exchange rates, define and use these B) What is the equation used to get the U.S. price of a foreign good? If a Mexican good costs 75 pesos and the exchange rate is $2/peso what is the U.S price? C) If the demand for travel to Mexico goes down what happens to the exchange rate? Answer for the U.S. dollar and the Mexican peso. Now the demand to invest in Mexican real estate goes up, what now happens to the exchange rates?
A) Where does the market for foreign currency come from? How does this market work if we use the flexible exchange rate system? Using terms from lecture what happens to both countries currency if there is a shift of supply or demand? There were terms given that are used to describe changes in currency exchange rates, define and use these
B) What is the equation used to get the U.S. price of a foreign good? If a Mexican good costs 75 pesos and the exchange rate is $2/peso what is the U.S price?
C) If the demand for travel to Mexico goes down what happens to the exchange rate? Answer for the U.S. dollar and the Mexican peso. Now the demand to invest in Mexican real estate goes up, what now happens to the exchange rates?
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