Question 1

What is the foreign exchange market?

Accepted Answer

A global market where currencies are bought, sold, and exchanged

(exchanging USD to Euros to Yuan, etc.)

Question 2

What is the exchange rate?

Accepted Answer

The price of one currency in terms of another

(As of 4/26/23, the exchange rate for USD to Euros is 0.90€)

Question 3

What does it mean for a currency to appreciate or depreciate?

Accepted Answer

Appreciate: one currency becomes more valuable in terms of another

Depreciate: one currency becomes less valuable in terms of another

6.2 Exchange Rates, AP Macroeconomics Flashcards