EC140 Midterm 2 Notes Wilfrid Laurier ECON 140 Intro To Macroeconomics EC140 Midterm 2 Notes

EC140 Midterm 2 Notes Wilfrid Laurier ECON 140 Intro To Macroeconomics EC140 Midterm 2 Notes

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Econ Midterm 2 Notes

Chapter 3.1

Definitions:

Foreign Currency - Foreign bank notes, coins and bank deposits

Foreign Exchange Market - the market in which currency of one country is traded for another country's currency

Exchange Rate - price of one country's currency exchanges with another

Nominal exchange rate - value of Canadian dollar expressed in foreign currency per Canadian Dollar (measures how much foreign currency exchanges for one Canadian dollar)

Real exchange rate - relative price of foreign produced good and service (Measures quantity of real GDP of other country per unit of Canadian real GDP)

Purchasing Power Parity - When real exchange rate is 1, when two quantity of difference currency can buy the same quantity of good and service. This means equal value of money

EC140 Midterm
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Excerpt from file: Econ Midterm 2 Notes Chapter 3.1 Definitions: Foreign Currency Foreign bank notes, coins and bank deposits Foreign Exchange Market the market in which currency of one country is traded for another countrys currency Exchange Rate price of one countrys currency exchanges with another Nominal

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