I. Exchange rates and the foreign exchange market - Ch. 13

1. Exchange rates a. Definition b. Converting dollars to foreign exchange and vice versa c. Forward and spot rates

2. Triangular arbitrage and the cross-rate

3. Uncovered interest rate parity and the forward exchange rate II. The Determination of Exchange Rates (Reading) 1. The supply and demand for foreign exchange

2. Factors shifting supply

3. Factors shifting demand III. Exchange rates in the long run -

Ch. 14 1. The Law of One Price 2. Absolute Purchasing Power Parity

a. Definition

b. PPP and the exchange rate c. Problems with PPP

3. The Real Exchange Rate - definition and interpretation

4. Relative Purchasing Power Parity

a. Definition

b. The inflation differential and the exchange rate

5. The Quantity Theory of Money

a. Determination of the price level

b. Determination of the inflation rate

c. Money growth and the exchange rate