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 the following:

- Reasons that exchange rates change daily
- 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
- The importance of exchange rates in global marketing and trade

Process/Skill Questions:

- How is the value of currency affected by supply and demand? Balance of payments? 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?