Exchange Rate - An exchange rate between two currencies is the rate at which one currency will be exchanged for another. It is also regards as the value of one country’s currency in terms of another currency.

Currency depreciation – is the loss of value of country’s currency with respect to one or more foreign reference currencies. Currency appreciation – is the increase of value of a currency. The appreciation of a country currency refers to an increase in the value of that country’s currency.

Depression \ Recession State of decline in growth, followed by unemployment. There is a shortage (lack) in demand and therefore falling prices – deflation.

Export – selling goods and services produced in the home country to other markets. Import – a good that is brought in from another country for sale. Import goods or services are provided to domestic consumers by foreign producers.

export Advantages: Have income. Production. Profit. Puts foreign currency. Disadvantage: Higher market prices.

import Advantages: We can not produce everything here, there are products abroad that not produced here. Lowers the prices (mainly due to high wages and lack of row materials).

Disadvantages: Reduces the foreign exchange reserves. Offensive production in the country.

Private consumption Private consumption includes all purchases of households from firms (according to family expenditure survey) and therefore impacts on economic output.

What effects private consumption 1) When we have disposable income. 2) Cumulative property. 3) Gap in time, past or future. 4) Needs \ desires \ preferences \ flavors. 5) National “mood”.

The biggest component of the GDP equation is private consumption, and this consumption will determine the economic reality. private consumption is what will affect the costs of economic policy.