How and why a central bank would build foreign currency reserves. Created by Sal Khan.

If you track the value of a currency, you'll notice its value fluctuates. In this video, we introduce to how exchange rates can fluctuate. Created by Sal Khan.

Learn about what an exchange rate is and how to determine the cost of goods in another currency.

How a currency crisis in Thailand led to a banking crisis in the 1990s. Created by Sal Khan.

Going through the mechanics of how a Thai financial institution can lose their shirt when their currency devalues. Created by Sal Khan.

Principles of Macroeconomics 2e covers the scope and sequence of most introductory economics courses. The text includes many current examples, which are handled in a politically equitable way. The outcome is a balanced approach to the theory and application of economics concepts. The second edition has been thoroughly revised to increase clarity, update data and current event impacts, and incorporate the feedback from many reviewers and adopters.Changes made in Principles of Macroeconomics 2e are described in the preface and the transition guide to help instructors transition to the second edition.

By the end of this section, you will be able to:

Explain supply and demand for exchange rates
Define arbitrage
Explain purchasing power parity's importance when comparing countries.

By the end of this section, you will be able to:

Define "foreign exchange market"
Describe different types of investments like foreign direct investments (FDI), portfolio investments, and hedging
Explain how appreciating or depreciating currency affects exchange rates
Identify who benefits from a stronger currency and benefits from a weaker currency

In this video, learn about how the model of the foreign exchange market is used to represent the determination of exchange rates.

How a central bank could use foreign currency reserves to keep its own currency from devaluing. Created by Sal Khan.