Alright. So let's try this example together. But before we get into it, I want to teach you a little trick about exchange rates that comes into play with any kind of unit conversion. So let's do a simple example before we get to this one where we're going to think about we have we know our exchange of feet to inches, right? We know that there are 12 inches per foot, right? Per 1 foot, which is the same thing as for every 1 foot, there's 12 inches, right? So if I were to ask you, how many inches are in 3 feet? Well, you would probably know that there are 36 inches right? 12 inches per 1 foot, 3 feet, 36 inches right? Well, how do we use this and show it mathematically? Okay. So this is technically our exchange rate here. 12 inches for every 1 foot or 1 foot for every 12 inches, right? And we want to know 3 feet, how many inches, right? 3 feet, how many inches? So the idea is we're going to use our exchange rate from inches to feet and we're going to multiply it by feet. The idea is that we want to in 3 feet? How many inches for in 3 feet? How many inches in 3 feet? So we want to cancel out the units of feet and be left with inches. Let me show you what I mean. So we're going to use our exchange rate, 12 inches for 1 foot, and we're going to multiply it by how many feet we want. We want 3 feet. So in 3 feet, how many inches are there? And what can happen here is we can cancel out these units. So notice that the feet are in the numerator here because it's 3 over 1, right? There are 3 and then there are feet in the denominator. So from a mathematical standpoint, we can cancel out those units, the feet and the feet and we'll be left with inches. This is the way I want you to think about doing these currency exchanges when you have to do math like we see in this problem. So 12 divided by 1 times 3. So now, we use the numbers. We've canceled out the units and we're left with inches. 12 divided by 1 is 12 times 3 is 36 inches right? So that tells us that in 3 feet, there's 36 inches right? If there's 12 inches per foot, 3 feet, well, that gets us to 36 inches So what you want to do is be able to cancel out the feet. Notice, if we had used this if we had used this one right here, 1 foot divided by 12 inches we would not be able to cancel out because feet would have both been in the numerator. We want to cancel out feet and feet here. So this does not work. We want to use this one right here. Okay? So you want to think, we can always flip the exchange rate so that we can cancel out the units that we don't want and end up in the units we do want. Okay? So now let's look at our actual example here. Clutchtopia's currency conversion is currently 1.7 Clutch coin for 1 US dollar. 1.7 Clutch coin cc's per 1 US dollar. So there's our exchange rate. If a US citizen was planning to visit Clutchtopia, how many dollars? So let me erase this right here. How many dollars would they need, right? How many dollars? So we want our final answer to be in dollars, right? So we want to cancel out the clutch coins and be left with dollars. How many dollars would they need to exchange to receive 100 clutch coins? So what we need to do is convert these units from Clutch Coins to Dollars. And we're given our 2 exchange rates here. So I don't want to leave this empty. This was what it was over here before. Okay, what are our two exchange rates that are equivalent to each other? We either have 1.7 clutch coins per 1 US dollar or 1 US dollar per 1.7 clutch coin, and we want to do the same thing. Do we want to end up in dollars, or do we want to end up in clutch coins? What is our question asking us? It's asking us how many dollars, right? So we want to end up in dollars, we want to cancel out the clutch coin. So what we need is clutch coin in the denominator and clutch coin in the numerator to cancel out. Just like we had in our example over here. So what are we going to do? We're going to use this one that has clutch coins in the denominator because we're going to multiply it by 100 clutch coins. We want to know how many dollars are needed to receive 100 clutch coins. So we want to go in the bank with a certain amount of dollars and then leave the bank with 100 clutch coins. So how many dollars is that? So what we're going to do, we're going to do the 1.1 US dollar divided by 1.7 clutch coins, and we're going to multiply it by the 100 clutch coins. Right? We multiply it by 100 because this exchange rate is equal to 1. That's what 1 would be. So we multiply it by the 100 clutch coins and we'll see how many dollars it would be. So notice what happens. We've got clutch coins in the denominator, clutch coins in the numerator and the clutch coins are gone, and we're left with US dollars. Okay? So what we need to do is 1 divided by 1.7, so now we do the math. 1 divided by 1.7 times 100 and that gives us that equals 58.82. 58.82 and that's in dollars, right? That gives us an amount in dollars because we've canceled out these clutch coins here and we're left with US dollars. Okay? So that's what this tells us here. It tells us the amount of US dollars"],["we need to get 100 clutch coins. Okay? So I know it can be a little tricky when it comes to exchange rates, but being able to do this unit conversion and flipping the exchange rate when you need to to cancel out the units, that's a big trick in being able to solve these exchange rate problems. Alright. Let's pause here and now you guys can try a practice simulation.
Table of contents
- 1. Introduction to Macroeconomics1h 57m
- 2. Introductory Economic Models59m
- 3. Supply and Demand3h 43m
- Introduction to Supply and Demand10m
- The Basics of Demand7m
- Individual Demand and Market Demand6m
- Shifting Demand44m
- The Basics of Supply3m
- Individual Supply and Market Supply6m
- Shifting Supply28m
- Big Daddy Shift Summary8m
- Supply and Demand Together: Equilibrium, Shortage, and Surplus10m
- Supply and Demand Together: One-sided Shifts22m
- Supply and Demand Together: Both Shift34m
- Supply and Demand: Quantitative Analysis40m
- 4. Elasticity2h 26m
- Percentage Change and Price Elasticity of Demand19m
- Elasticity and the Midpoint Method20m
- Price Elasticity of Demand on a Graph11m
- Determinants of Price Elasticity of Demand6m
- Total Revenue Test13m
- Total Revenue Along a Linear Demand Curve14m
- Income Elasticity of Demand23m
- Cross-Price Elasticity of Demand11m
- Price Elasticity of Supply12m
- Price Elasticity of Supply on a Graph3m
- Elasticity Summary9m
- 5. Consumer and Producer Surplus; Price Ceilings and Price Floors3h 40m
- Consumer Surplus and WIllingness to Pay33m
- Producer Surplus and Willingness to Sell26m
- Economic Surplus and Efficiency18m
- Quantitative Analysis of Consumer and Producer Surplus at Equilibrium28m
- Price Ceilings, Price Floors, and Black Markets38m
- Quantitative Analysis of Price Ceilings and Floors: Finding Points20m
- Quantitative Analysis of Price Ceilings and Floors: Finding Areas54m
- 6. Introduction to Taxes1h 25m
- 7. Externalities1h 3m
- 8. The Types of Goods1h 13m
- 9. International Trade1h 16m
- 10. Introducing Economic Concepts49m
- Introducing Concepts - Business Cycle7m
- Introducing Concepts - Nominal GDP and Real GDP12m
- Introducing Concepts - Unemployment and Inflation3m
- Introducing Concepts - Economic Growth6m
- Introducing Concepts - Savings and Investment5m
- Introducing Concepts - Trade Deficit and Surplus6m
- Introducing Concepts - Monetary Policy and Fiscal Policy7m
- 11. Gross Domestic Product (GDP) and Consumer Price Index (CPI)1h 37m
- Calculating GDP11m
- Detailed Explanation of GDP Components9m
- Value Added Method for Measuring GDP1m
- Nominal GDP and Real GDP22m
- Shortcomings of GDP8m
- Calculating GDP Using the Income Approach10m
- Other Measures of Total Production and Total Income5m
- Consumer Price Index (CPI)13m
- Using CPI to Adjust for Inflation7m
- Problems with the Consumer Price Index (CPI)6m
- 12. Unemployment and Inflation1h 22m
- Labor Force and Unemployment9m
- Types of Unemployment12m
- Labor Unions and Collective Bargaining6m
- Unemployment: Minimum Wage Laws and Efficiency Wages7m
- Unemployment Trends7m
- Nominal Interest, Real Interest, and the Fisher Equation10m
- Nominal Income and Real Income12m
- Who is Affected by Inflation?5m
- Demand-Pull and Cost-Push Inflation6m
- Costs of Inflation: Shoe-leather Costs and Menu Costs4m
- 13. Productivity and Economic Growth1h 17m
- 14. The Financial System1h 37m
- 15. Income and Consumption52m
- 16. Deriving the Aggregate Expenditures Model1h 22m
- 17. Aggregate Demand and Aggregate Supply Analysis1h 18m
- 18. The Monetary System1h 1m
- The Functions of Money; The Kinds of Money8m
- Defining the Money Supply: M1 and M24m
- Required Reserves and the Deposit Multiplier8m
- Introduction to the Federal Reserve8m
- The Federal Reserve and the Money Supply11m
- History of the US Banking System9m
- The Financial Crisis of 2007-2009 (The Great Recession)10m
- 19. Monetary Policy1h 32m
- 20. Fiscal Policy1h 0m
- 21. Revisiting Inflation, Unemployment, and Policy46m
- 22. Balance of Payments30m
- 23. Exchange Rates1h 16m
- Exchange Rates: Introduction14m
- Exchange Rates: Nominal and Real13m
- Exchange Rates: Equilibrium6m
- Exchange Rates: Shifts in Supply and Demand11m
- Exchange Rates and Net Exports6m
- Exchange Rates: Fixed, Flexible, and Managed Float5m
- Exchange Rates: Purchasing Power Parity7m
- The Gold Standard4m
- The Bretton Woods System6m
- 24. Macroeconomic Schools of Thought40m
- 25. Dynamic AD/AS Model35m
- 26. Special Topics11m
23. Exchange Rates
Exchange Rates: Introduction
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