Key Concepts: Past and Current Exchange-Rate Arrangements, Fixed or Floating Exchange Rates, Price and Exchange Rates, Interest Rates and Exchange Rates

OANDA.com
http://www.oanda.com/channels/investor/investors.shtml

Review the real-time foreign exchange "Currency Trends" information on major currency-pairs (U.S. dollar & Euro, U.S. dollar & Japanese yen, and Euro & Swiss franc). Scroll down the page and survey the current "FXNews".

• Assess how much the U.S. dollar has appreciated or depreciated against the Euro and Japanese yen over the past year.
• What economic and political news may currently be affecting the value of the U.S. dollar?
• Review the service offered by e-gold.com (http://www.e-gold.com/). Explain why investors may be interested in holding "e-gold" in their investment portfolios.

Economist.com - Big Mac Index
http://www.economist.com/markets/Bigmac/Index.cfm

Click on the current "Big Mac Index" information.

• Assess whether the Purchase Power Parity (PPP) assumption holds in the real world in respect to Big Mac prices around the world.
• According to the current Big Mac Index, what currencies are significantly "undervalued" with respect to the U.S. Dollar? How would this influence the ability of those countries to export goods to the U.S.?
• Other than PPP, what other factors may influence the exchange rates?