10.2 The Determination of The Exchange Rate o Exchange rate is the relative price of the domestic currency and the foreign currency, and plays an important role in the international economic activities o The change of the exchange rate can directly affect the net export o The exchange rate can affect the domestic gross demand through the net export 复表经济学院10.2 The Determination of The Exchange Rate  Exchange rate is the relative price of the domestic currency and the foreign currency, and plays an important role in the international economic activities.  The change of the exchange rate can directly affect the net export.  The exchange rate can affect the domestic gross demand through the net export