Macroeconomics 10th Edition by Roger Arnold

Exercise 2

Suppose your objective is to predict whether the euro (the currency of the European Union) and the U.S. dollar will appreciate or depreciate on the foreign exchange market in the next two months. What information would you need to help make your prediction? Specifically, how would this information help you predict the direction of the foreign exchange value of the euro and dollar? Next, explain how a person who could accurately predict exchange rates could become extremely rich in a short time.