Give detail explanation of exchange rate, Macroeconomics

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Give detail explanation of Exchange Rate

In most countries, exchange rate is expressed using foreign currency as base currency. For instance, in Denmark, USD exchange rate would be expressed as 4.8 Danish kronor (DKK) per USD whereas in U.S., same exchange rate would be expressed as 0.208 USD/DKK (or 20.8 USD/100DKK). This way of specifying the exchange rate is termed as the direct method as you can immediately figure out how much you have to pay for one unit of a foreign currency.

 


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