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CFA Level 1
Economics

Understanding Exchange Rates

Very Easy International Economics Exchange Rates

In international economics, exchange rates play a crucial role in determining the value of one currency relative to another. A common way to express the exchange rate is by stating how much of one currency can be exchanged for a unit of another currency.

Consider the following exchange rate scenario: If 1 US dollar (USD) can be exchanged for 0.85 euros (EUR), what is the exchange rate from euros to US dollars?

Hint

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