Exchange rates

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  • Exchange Rates
    • Definition: the price of one currency in terms of another.
    • How are exchange rates determined
      • market forces and if those forces change the price is also likely to change
    • Factors affecting the demand of a currency
      • the demand for exports
        • firms selling goods and services to another country are expected to be paid in their own currency
        • example: a UK firm selling goods to an Australian firm do not want to be paid in pounds.  Demand for UK exports results in the demand for the Pound Sterling
      • inward foreign direct investment (FDI)
        • Untitled
      • Interest rates


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