3 big ideas of exchange rates

THREE BIG IDEAS:

1) One of the major ideas I learned about under this topic was the means of appreciation and depreciation for money on a currency market. On a market as the demand for a currency increases that currency’s value appreciates, and as a currency’s supply increases that currency’s value depreciates.

2) I also learned what affects the changes in a currency’s demand and supply. A currency’s demand on a market is affected by that country’s exports and investment flows into the country. An increase in demand will appreciate the currency, and a decrease in demand will depreciate the currency. An increase in demand could result from an increase in a countries’ exports (goods and services), an increase of foreigners’ investments within a country, an increase in a countries’ interest rates, a decrease in a countries’ inflation rates, speculative buying of a countries’ currency, or if the country is buying up their currency. Demand could decrease in response to a decrease in a country’s exports (goods and services), a decrease of foreigners’ investment within a country, a decrease in a country’s interest rates, or an increase in a country’s inflation rate.

3) Likewise, the currency supply also appreciates and depreciates a currency. A currency’s supply is primarily dependent on that country’s imports and its investment flows out of the country. These aspects can appreciate a currency if they decrease the supply or depreciate a currency if the increase the money supply. Supply could increase as a result of a country’s increase in imports (goods and services), an increase in a country’s foreign investment abroad, an increase in foreign interest rates, a decrease in foreign inflation rates, speculative selling of a country’s currency, or the country selling their currency. Supply could decrease from a decrease in a country’s imports (goods and services), a decrease in a country’s foreign investment abroad, a decrease in foreign interest rates, or an increase in foreign inflation rates.

Considering all of these ideas of exchange rates, I feel a deeper understanding can be found about how exchange rates work.

Reflection

It has now been three months into my second year of economics. Over the three months there has been many changes to the class. Some of these changes which I had to adjust to included the strong reliance on laptops for blogs and internet, the AAA text, the powerpoint lectures, and of course a new teacher as well as new course material. With these new changes I have had to do more independent learning in class, which I found difficult, yet I continue in my adjustment to it. There are also the powerpoint lectures, they do make it easier to take notes in class, however, at the same time it feels like there is less emphasis on the course material since it is not really discussed in depth, just briefed. Then with the AAA textbook, while it is shorter and more concise, it doesn’t engage as much as the McGee textbook, plus it is difficult to read a computer screen for so long.

In regard to the actual course material I am learning, I find that international economics is rather interesting and easy to grasp. For this information the laptops are helpful, because we have more access to articles and such on the internet, benefiting our learning. As a student I think that it is a difficult adjustment in becoming more reliant on my computer among everything else, but it is a transition that I am attempting.