March 25/26Announcements

• Due: 4/2/15– Macro bodies project– Vocab journal– Study Guide– Unit 5 notebook

• Bring get well cards for Vineyard to the media center.

EQs• What drives international trade

and determines specialization?• Why would China import a

product it could make on its own?

SSEIN3

Warm-Ups• Define comparative

advantage• Define absolute advantage

Agenda• Notes• Graded assignment

Exchange RatesSSEIN3 The student will explain how changes in exchange rates can have an impact on the purchasing power of individuals in the United States and in other countries.a) Define exchange rate as the price

of one nation’s currency in terms of another nation’s currency.

b) Locate information on exchange rates.

c) Interpret exchange rate tables.d) Explain why, when exchange

rates change, some groups benefit and others lose.

Exchange Rate• The price of one nation’s currency

expressed in terms of another nation’s currency.

• i.e. $1 = €.727 (Euros)• 1 Euro = $1.37• Exchange rate info found at:

– Newspapers– Banks – Internet

• Fixed rate: money is worth the same no regardless of economy

• Floating rate: money value changes with the stock market

Exchange Rate Table• How much does a U.S.

dollar cost in yen?• How many U.S. dollars

does it take to purchase a Thai baht?

• How many pounds would it take for a $10 meal in U.S.?

• How many dollars does it take to buy a €15.00 train ticket?

They buy ours(they’re visiting the U.S.)

We buy theirs(We’re visiting their country)

British Pound 0.49 2.06

Danish krone 5.17 0.19

Euro 0.69 1.44

Japanese yen 114.69 0.0087

Mexican peso 10.71 0.093

Swiss franc 1.17 0.86

Thai baht 31.7 0.03

International Indicators• Appreciation = when one

country’s currency rises against another country

• Depreciation = If one country’s currency falls against another country.

• As demand for a country’s currency rises, so does the price of the currency.

• Higher value = higher prices for international consumers

Appreciate/Depreciate

Who benefits?• Strong dollar• American importers: can

buy more internationally• Citizens travelling to

other countries• Weak Dollar• American exporters: our

stuff is cheaper• Foreigners buying our

stuff, their $ goes further• Exports increase