floating exchange rate determination

• What is an exchange rate?

  The price of one currency in another
• If £1 equals $1.60, what does this represent?

  The price of £1 in terms of dollars
• What forces determine an exchange rate in an economic market?

  Demand and supply
• When analyzing the pound exchange rate against the dollar, what is represented on the y-axis?

  Price of the pound in dollars
• When determining an exchange rate, what should be on the y-axis?

  The price of the currency being worked out
• When determining an exchange rate, what should be on the x-axis?

  Quantity of the currency you have
• In the market for pounds, what determines the equilibrium exchange rate?

  The intersection of demand and supply
• What is being analyzed when determining the exchange rate of pounds and dollars?

  The market for pounds
• What specifically determines an exchange rate?

  Demand and supply of the currency