Matakuliah
Tahun
: F0882 - Economic Analysis
: 2009
EXCHANGE RATES AND THE
INTERNATIONAL FINANCIAL SYSTEM
Chapter 9
Learning Outcomes
• The Balance of International Payments
• The Determination of Foreign Exchange Rates
• The International Monetary System
Bina Nusantara University
3
Growing U.S. Openness
Openness Varies Enormously
across Regions
Exchange-Rate Determination
A Decrease in Demand for Dollars Leads to
Dollar Depreciation
Monetary Tightening Increases Demand for
Dollars and Produces Dollar Appreciation
PPP Calculations Change the Relative Size
of Nations, 1998
Hume’s Four-Pronged International
Adjustment Mechanism
Governments Intervene to Defend Fixed
Exchange Rate