Skip to main content
Back

Exchange Rates: Shifts in Supply and Demand definitions

Control buttons has been changed to "navigation" mode.
1/15

Terms in this set (15)

  • Exchange Rate
    The price of one currency in terms of another, indicating how much foreign currency can be obtained per unit of domestic currency.
  • Equilibrium
    The point where the quantity of currency demanded equals the quantity supplied, determining the prevailing exchange rate.
  • Demand Curve
    A graphical representation showing the relationship between the exchange rate and the quantity of currency foreigners wish to buy.
  • Supply Curve
    A graphical representation showing the relationship between the exchange rate and the quantity of currency domestic agents offer for exchange.
  • Appreciation
    An increase in a currency's value relative to another, allowing more foreign currency to be obtained per unit.
  • Depreciation
    A decrease in a currency's value relative to another, resulting in less foreign currency per unit.
  • Foreign Income
    The earnings of individuals or entities outside the domestic country, influencing their ability to purchase domestic goods and currency.
  • US Income
    The earnings of individuals or entities within the United States, affecting their demand for foreign goods and currency.
  • US Interest Rates
    The return on investments within the United States, impacting foreign demand for US currency due to investment incentives.
  • Foreign Interest Rates
    The return on investments outside the United States, influencing domestic supply of currency for foreign investments.
  • Speculative Outlook
    Expectations about future currency movements, driving current demand or supply based on anticipated appreciation or depreciation.
  • Rightward Shift
    A movement of the demand or supply curve to the right, indicating an increase in demand or supply at every exchange rate.
  • Leftward Shift
    A movement of the demand or supply curve to the left, indicating a decrease in demand or supply at every exchange rate.
  • Imports
    Goods or services purchased from abroad, requiring domestic currency to be exchanged for foreign currency.
  • Speculators
    Market participants who act based on expectations of future currency value changes, influencing current market dynamics.