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International Economics (Subject) / Exchange Rates and the Foreign Exchange Market (Lesson)

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• Which are the two ways of exchange rates? Direct (foreign curreny in terms of euro) Indirect (price of euro in terms of foreign curreny)
• What is the nominal exchange rate? rate of which a person can trade its currency for a foreign currency
• Formel real exchange rate (Nominal Exchange Rate*Domestic Price)/Foreign Price
• What is the purchasing power parity theory and Exchange rate formel? a good must sell for the same price in every country (Foreign Price/ Domestic Price)
• What is the interest parity? return on deposits traded in the foreign exchange market depend on the interest rates and expected exchange rates
• expected dollar return formel R€=R$-appreciation/ depreciation 

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