1. McGraw-Hill/Irwin © 2012 The McGraw-Hill Companies, All Rights Reserved Chapter 19: What Determines Exchange Rates?

2. Copyright  2012 by The McGraw-Hill Companies, Inc. All rights reserved. 19-2 Figure 19.1 Selected Exchange Rates, 1970-2011 (Monthly)

3. Copyright  2012 by The McGraw-Hill Companies, Inc. All rights reserved. 19-3 Figure 19.1 Selected Exchange Rates, 1970-2011 (Monthly)

4. Copyright  2012 by The McGraw-Hill Companies, Inc. All rights reserved. 19-4 Exports Plus Imports as a Percentage of GDP Figure 19.2 Determinants of the Exchange Rate in the Short Run

5. Copyright  2012 by The McGraw-Hill Companies, Inc. All rights reserved. 19-5 Figure 2.2 The Market for Motorbikes: Demand and Supply National Income per Capita, 2009, Relative to the United States = 100

6. Copyright  2012 by The McGraw-Hill Companies, Inc. All rights reserved. 19-6 Figure 19.3 Relative Purchasing Power Parity: Inflation Rate Differences and Exchange-Rate Changes, 1975-2009

7. Copyright  2012 by The McGraw-Hill Companies, Inc. All rights reserved. 19-7 Figure 19.3 Relative Purchasing Power Parity: Inflation Rate Differences and Exchange-Rate Changes, 1975-2009

8. Copyright  2012 by The McGraw-Hill Companies, Inc. All rights reserved. 19-8 Figure 19.4 Actual Exchange Rates Consistent with Relative PPP, Monthly, 1975-2011

9. Copyright  2012 by The McGraw-Hill Companies, Inc. All rights reserved. 19-9 Figure 19.4 Actual Exchange Rates Consistent with Relative PPP, Monthly, 1975-2011

10. Copyright  2012 by The McGraw-Hill Companies, Inc. All rights reserved. 19-10 Figure 19.5 Overview of Key Elements, Exchange-Rate Overshooting

11. Copyright  2012 by The McGraw-Hill Companies, Inc. All rights reserved. 19-11 Figure 19.6 Exchange-Rate Path, Exchange-Rate Overshooting

12. Copyright  2012 by The McGraw-Hill Companies, Inc. All rights reserved. 19-12 Nominal and Real Effective Exchange-Rate Values for the U.S. Dollar, 1975-2011