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In Graphing a Relationship Between Two Variables, Economists Always Follow

question 32

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In graphing a relationship between two variables, economists always follow the mathematical convention. Thus, if price is the independent variable then it is measured on the horizontal axis.


Definitions:

Flexible Exchange Rates

A monetary system in which the value of the currency is permitted to vary based on the foreign exchange market dynamics.

Dollar Price

The cost of a product or service expressed in terms of the amount of currency needed to purchase it.

Equilibrium Dollar Price

Refers to the price level at which the supply of dollars in the foreign exchange market is equal to the demand for dollars.

Flexible Exchange Rates

A foreign exchange system where the value of currencies is determined by market forces without direct government intervention.

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