Introduction

In this lesson, we will revisit supply and demand, specifically the supply and demand of currencies. In a sense, this lesson is a summary of all the skills learned throughout the course. You will be able to see what changes in inflation, income, and interest rates, here and around the world, do to the value of different currencies.

At the completion of this unit, you will have the basic knowledge to determine whether or not the dollar appreciates or depreciates relative to foreign currencies. With the appreciation or depreciation of the dollar, you will then determine what effect the changing value of the dollar will have on exports and imports.

 

 

 

Lesson Objectives

Following successful completion of this lesson, students will be able to:

  • explain why citizens of one country would demand the currency of other countries.
  • explain how the value of currency in the foreign exchange market either appreciates or depreciates.
  • explain how a change in the value of a currency will affect the exports or imports of a country and the overall effect on Aggregate Demand.

The above objectives correspond with the Alabama Course of Study: Economics objectives: 12, 12.3, 12.4

 

    Next Page