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 d. Cross-rate 2. Covered interest rate parity II. The Determination of Exchange Rates (Reading) The supply and demand for foreign exchange Shifts in supply Shifts in demand LUMP- III. Exchange rates in the long-run Ch. 14 1. The Law of One Price 2. Absolute Purchasing Power Parity a. Definition b. Problems with PPP 3. Relative Purchasing Power Parity 4. The Real Exchange Rate - definition and interpretation 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