Title: Explain the concept and importance of exchange rates.
Course: Opportunities in Global Trade (12056-I) > Section: Understanding Price and Payments in the International Marketing Plan

Explanation should include the definitions of exchange rate and foreign exchange and incorporate the following:

- Reasons that exchange rates change slightly each day
- Ways that exchange rates facilitate business transactions between countries
- Ways that exchange rates are affected by supply and demand
- Effect of balance of payments, economic conditions, and political stabilization on exchange rates
- Reasons that an understanding of exchange rates is important in global marketing and commerce

Process/Skill Questions:

- How is the value of currency affected by supply and demand?
- How is the value of a country's currency affected by balance of payments?
- How is the value of a country's currency affected by economic conditions such as inflation and interest rates?
- How does the degree of political stability in a country affect exchange rates?
- How can exchange rate volatility affect a global business? How can it affect consumers around the world?