经济学的思维方式（第11版）（英文版）_0589-0595.pdfVIP

A-PDF Split DEMO : Purchase from www.A-PDF.com to remove the watermark Chapter 17 International Trade and Finance 23 $0.15 = F1, the franc price of the same computer is F6.66 million—a substantial reduction in price. To buy American goods at the new lower franc price, the French will increase their demand for dollars. Again, the quantity of dollars being offered on the money market will fall, and the growth in foreign dollar holdings will be checked. Determination of the Exchange Rate Like the price of anything else, exchange rates are determined by the forces of demand and supply, although government may interfere to alter the rate from what market forces along would have produced. When there is no official or government interference, the rates are free or floating. When government intervenes, by buying or selling currency in the foreign exchange rates by a central bank or other some official government agency, the exchange rates are fixed or pegged. From 1945 to 1971 exchange rates were basically fixed. Since 1971, however, rates have been set flexibly with some government intervention in a “dirty,” or managed, floating exchange rate system, in which the prices of currencies are partly determined by competitive market forces and partly determined by official government intervention. National currencies have a market value—that is, a price—because individuals, firms, and governments use them to buy foreign goods, services, and securities. There is a market demand for a national currency like the franc. Furthermore, the demand for the franc (or any other currency) slopes downward, like curve D in Figure 17.6. To see why, look at the market for francs from the point of view of a U.S. resident. As the dollar price of the franc falls, the price of French goods to Americans also falls. As a result, Americans will want to buy more French goods. They will requ