Slide 5A
Crazy for Currency
Lesson 5
Slide 5B
What Does That Mean?
Term
Definition
conversion
the exchange of one country or economic unit’s currency
for another.
exchange rate
the rate at which the currency of one country may be
exchanged for that of another.
European Union
“EU”; an economic and political union of 28 member
states primarily located in Europe.
Eurozone
the 18 members of the EU that use the euro as their
currency.
Slide 5C
What Does That Mean?
Term
Definition
euro
the official currency of the Eurozone.
Maastricht Treaty
signed in February 1992 by European countries; created
the EU.
currency strength
currency strength the relative value of a currency in the
foreign exchange market.
Slide 5D
What Does That Mean?
Term
Definition
weak currency
a currency that is going down in value.
strong currency
a currency that is going up in value.
FX
forex; foreign exchange.
Slide 5E
Reminder
 Remember to visit
http://c21student.com/flashc
ards/
to access the online flashcards!
Slide 5F
Lesson 5 Objectives
 1. Name the currencies of ten countries or
economic units.
 2. Transact a currency conversion.
 3. Explain the impact of a weak vs. strong
dollar on trade.
 4. Summarize Eurosceptic criticism of
Eurozone membership.
Slide 5G
Currency Craze!
 Money is expressed as currency
 Countries name their currency
 Currencies have symbols too
 Currencies have codes to distinguish
similarly named currencies
Slide 5H
Currency Conversion
 Rarely a 1:1 exchange
 FX = foreign exchange
 Exchange rates float freely
 Rates change relative to each other only
 Rates impact purchasing power of the
converted currency
Slide 5I
What makes exchange
rates fluctuate?
 economic news or events.
 trade relations
 political instability (or improved stability)
 any perceived strength or weakness in a country’s economic
condition.
 interest rate changes which make investments in a country
more (or less) attractive.
Strength of currency is an indicator of the economic health of
a nation
Slide 5J
Hello, Euro!
 Single currency for the 18 Eurozone countries
who also share monetary policy set by the
European Central Bank (ECB)
 Not all EU countries are in Eurozone
 Con: Euroskeptics dislike the common
monetary policy of the ECB
 Pro: economic growth and commonality of
economic goals has contributed to economic
growth of the Eurozone
Slide 5K
The Big Picture
Money is expressed as currency. The values of currencies
of different countries are not equal. Many programs and
apps enable you to quickly and accurately calculate
currency conversions. The strength of a currency reflects
the country’s economic health. A strong currency enjoys a
favorable exchange rate, which increases the purchasing
power of that currency. Weak currency reduces the
purchasing power of the currency overseas. The Eurozone
refers to the 18 countries of the EU who have adopted the
euro as legal tender. The benefits and disadvantages of EU
and Eurozone membership continue to be debated and will
shape European politics and commerce for many years.
Slide 5L
Ponder and Predict
 Recall that the functions of money are to
provide 1) a medium of exchange, 2) a
standard numerical measurement for
comparing the values of dissimilar
objects, and 3) a store of value, so people
can accumulate wealth. One of those
functions of money, in particular, had a
huge impact on commerce. Can you
guess which? How did it impact the
growth of commerce?