CHAPTER 12
Exchange Rate Determination
LEARNING OBJECTIVES
After reading this chapter, you should be able to:
- Identify the characteristics of the international monetary system
- Understand the basics of exchange rates
- Outline the history of the Bretton Woods Agreement
- Explain the functioning of the foreign exchange market
THE FALAFEL INDEX
The Falafel Index, is the Middle East’s answer to the Big Mac Index. The Big Mac Index is a standard global tool for measuring purchasing power. This index determines the purchasing power of different currencies by comparing the prices of McDonald’s signature hamburger—the Big Mac in various countries across the world. This makes it a tool of comparison of the purchasing power of different currencies. ...
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