Exchange RatesEconomics - Ms. Vetter and Mr. Johnson12 Grade

Today we will...•Go over a brief history of exchange rates

•Learn what they are and how to calculate them

•See how far our dollars will go in other countries

History• Gold Standard: the system in which the value of currency was defined in

terms of goldo 1 ounce = $35

• Inflationo a general increase in prices MEANING: the dollar is ‘worth less’o example: a bag of cheetos is 80 cents, if the price INCREASES to

$1.20, you can no longer buy cheetos with your dollar.

• 1971 - NO MORE GOLD

• Exchanged rates:the price of one nation’s currency in terms of another nation’s currency

SIX MOST POPULAR CURRENCIES

Ten Most Popular Currencies1. US Dollar2. Euro3. Japanese Yen4. Sterling5. Swiss Franc6. Aussie7. Canadian Dollar8. Swedish Crown9. Hong Kong Dollar10. Corona Norway

Current Exchange Rates

$1.00=0.72 Euro

$1.00=1.09 CAD

Hypothetical SituationEurope is going through a big economic crisis. Their currency has inflated

(meaning it is less valuable). It has depreciated (decreased in value) relative to the dollar.

The exchange rate is now $1=1.44 Euros.

Complete the first half of your chart with this new exchange rate. Note the differences.

Canada is awesome!Let’s pretend that in the next three years, Canada experiences an economic

boom. The CAD appreciates (gains value) by 25% relative to the U.S. dollar.

The new exchange rate is $1=1.36 CAD.

Fill out the second half of your chart and note how things are changing.

Exit slipWrite down: One thing you learned from the lecture. One thing that you learned from the activity. One way in which you could be able to use what you learned today.