Lecture The economics of Money, Banking and Financial markets: Chapter 19 The foreign exchange market. After studying this chapter you should be able to summarize the basic function performed by the foreign exchange market; identify the factors that lead to changes in the exchange rate in the long run; identify the factors that lead to changes in the exchange rate in the short run; explain why changes in the money supply lead to exchange rate overshooting (causing the exchange rate to change by more in the short run than in the long run). |
