Preview The basics of exchange rates Exchange rates and the prices of goods The foreign exchange markets o The demand of currency and other assets a model of foreign exchange markets role of interest rates on currency deposits role of expectations of exchange rates Copyright G 2012 Pearson Education. All rights reserved 14-2Copyright © 2012 Pearson Education. All rights reserved. 14-2 Preview • The basics of exchange rates • Exchange rates and the prices of goods • The foreign exchange markets • The demand of currency and other assets • A model of foreign exchange markets – role of interest rates on currency deposits – role of expectations of exchange rates