March 25/26 Announcements 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 Rates SSEIN3 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. Define exchange rate as the price of one nation’s currency in terms of another nation’s currency. Locate information on exchange rates. Interpret exchange rate tables. 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? 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 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?

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