An exchange rate is the price of one country’s money in terms
of some other country’s money. It is the relative price of one national currency
expressed in terms of another national currency. Like the relative prices of
goods, exchange rates can be expressed in one of two equivalent ways. For
example, in June 1993, one U. S. dollar traded on the foreign exchange market
for about six French francs. One U. S. dollar cost about six French francs to
buy, or one U.S. dollar sold for about six French francs. This exchange rate is
the relative price of the U.S. dollar in terms of French francs. Alternatively,
it would be just as accurate to say that one French franc cost, or would buy,
about 17 cents. This would be the relative price of the French franc in terms of
the U. S. dollar. 1) An (46) is the price of
one country’s money in terms of some other country’s money. 2)
It is the (47) price of one national currency (48)
in terms of another national currency. 3) In June
1993, one U.S. dollar cost about (49) French francs to
buy. 4) In June 1993, one French franc would buy about
(50) cents.