1. Unit 5, Lesson 13 Currency Exchange
AOF Business Economics
Unit 5, Lesson 13 Currency Exchange
Copyright © 2008–2011 National Academy Foundation. All rights reserved.
Copyright © 2008–2011 National Academy Foundation. All rights reserved.

2. Currency is a type of commodity
Currencies can be exchanged and purchased for an agreed-upon value, just like other commodities.
Copyright © 2008–2011 National Academy Foundation. All rights reserved.

3. Like other commodities, currencies have markets
Currencies can be bought and sold in several ways, including:
Interbank trading
From banks
Through brokers and traders
In what ways are currency markets similar and different from the stock market?
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4. The exchange rate is the market value of a currency, and it reflects supply and demand
Generally, the more a currency is in demand, the higher its value.
If a currency is overvalued, are more or fewer people likely to buy it?
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5. Many factors influence the demand for a currency
Positive
Negative
Stable government
Low inflation
Strong, stable economic growth
Positive trade balance (exports exceed imports)
Unstable government
High inflation
Slow or erratic economic growth
Trade deficit (imports exceed exports )
Copyright © 2008–2011 National Academy Foundation. All rights reserved.

6. Understanding currencies is important for businesses
Businesses deal with currency exchange in many different ways:
Purchase resources and labor in foreign currencies
Sell products and services in foreign currencies
Invest their earnings in foreign currencies
Buying resources and labor
Currency out
Currency in
Selling products
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7. Business economists contribute to important decisions about currencies
They help businesses forecast the values of the different currencies in which they trade
They help make decisions about which markets to sell goods and services in
They understand how costs vary to produce goods in different countries
Copyright © 2008–2011 National Academy Foundation. All rights reserved.