CURRENCY EXCHANGE

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CURRENCY EXCHANGE

• How to be a smart shopper in other countries

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• When we are travelling if we want to buy
  different goods at the country that we visit we
  must go to the bank and convert US dollars to the
  local currency.
• Not all countries use the same currency, and the
  currency of one country is not necessarily
  equivalent in value to another.

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• So suppose we decided to go to Mexico for spring
  break and you want to bring 1000 with you, but
  you want it in Mexican Pesos.
• You can use the newspaper to find out the
  exchange rate before you go to the bank.

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How do we read this chart?

• The first column tells you how much 1 Mexican
  Peso is worth in US.
• The second column tells you how many Mexican Peso
  1 will buy.

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• So on that particular day we have
• 1 9.125 Pesos and 1Peso .10965
• Your 1000 will get you
• 1000 9.125 Pesos 9,125 Pesos

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• Now suppose you see a sweater you like and it
  costs 200 Pesos. You know the same sweater costs
  30 here in Chicago. Are you outraged at how
  expensive it is?
• Well, first you should figure out what 200 Pesos
  is worth in US .

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• How do we do that? Well, we know that
• 1 Peso .10965
• So 200 Pesos 200.10965
• 21.93
• In fact, the sweater is 10 cheaper in Mexico and
  you should buy it.

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Why bother with this?

• It is handy information if you are going to
  travel.
• You will be doing an Activity on this today.
• Next week we are starting CPI where we will be
  using some of these same ideas. So think of this
  as warm up.