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Exchange Rates

In today's 12th-grade economics lesson, Ms. Vetter and Mr. Johnson will explore the concept of exchange rates, including their history and calculation. Students will learn about the gold standard and how inflation affects currency value, making a dollar worth less over time. We will discuss the most popular currencies globally and current exchange rates, examining hypothetical situations around currency depreciation and appreciation, specifically focusing on the Euro and Canadian Dollar. Engage in activities to solidify understanding and think about real-world applications of these concepts.

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Exchange Rates

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  1. Exchange Rates Economics - Ms. Vetter and Mr. Johnson 12 Grade

  2. Today we will... •Go over a brief history of exchange rates •Learn what they are and how to calculate them •See how far our dollars will go in other countries

  3. History • Gold Standard: the system in which the value of currency was defined in terms of gold • 1 ounce = $35 • Inflation • a general increase in prices MEANING: the dollar is ‘worth less’ • example: a bag of cheetos is 80 cents, if the price INCREASES to $1.20, you can no longer buy cheetos with your dollar. • 1971 - NO MORE GOLD • Exchanged rates:the price of one nation’s currency in terms of another nation’s currency SIX MOST POPULAR CURRENCIES

  4. Ten Most Popular Currencies 1. US Dollar 2. Euro 3. Japanese Yen 4. Sterling 5. Swiss Franc 6. Aussie 7. Canadian Dollar 8. Swedish Crown 9. Hong Kong Dollar 10. Corona Norway

  5. Current Exchange Rates $1.00=0.72 Euro $1.00=1.09 CAD

  6. Hypothetical Situation Europe is going through a big economic crisis. Their currency has inflated (meaning it is less valuable). It has depreciated (decreased in value) relative to the dollar. The exchange rate is now $1=1.44 Euros. Complete the first half of your chart with this new exchange rate. Note the differences.

  7. Canada is awesome! Let’s pretend that in the next three years, Canada experiences an economic boom. The CAD appreciates (gains value) by 25% relative to the U.S. dollar. The new exchange rate is $1=1.36 CAD. Fill out the second half of your chart and note how things are changing.

  8. Exit slip Write down: One thing you learned from the lecture. One thing that you learned from the activity. One way in which you could be able to use what you learned today.

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