Abstract
Given the importance of foreign exchange in introductory economics courses, this paper aims at providing a full and intuitive teaching of foreign exchange. First, there is a review of how the major current introductory texts offer somewhat inadequate treatment of the topic. Then, international transactions within a balance of payments framework are explained. Importantly, the market equilibrium exchange rate between the dollar and the euro is concurrently derived. Finally, the paper introduces, within a comparative static framework, changes in exchange rates from changes in major macroeconomic variables: the GDP of trading partners, domestic price level, and real interest rates.
Recommended Citation
(2026)
"Teaching Foreign Exchange Rates: A Primer,"
Journal of Economics and Finance Education: Vol. 21:
Iss.
2, Article 6.
Available at:
https://scholarship.rollins.edu/jefe/vol21/iss2/6
