AP Economics – 4/26/19
I. Bellwork
On iLearn: Worksheet 42.3: Big Mac Index
“What Does the Big Mac Index Really Measure?”
II. Objectives:
- Explain the role of the foreign exchange market and the exchange rate
- Discuss the importance of real exchange rates and their role in the current account
III. The Role of the Exchange Rate
A. Understanding Exchange Rates
- Discussion: Worksheet 42.1
B. The Equilibrium Exchange Rate
C. Inflation and Real Exchange Rates
D. Purchasing Power Parity
IV. Classwork
- Worksheet 42.2: Exchange Rates
- Worksheet 42.4: Graphing Exchange Rates
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