1.  Go to the ETS website and use the search link and type in 'exchange rate'.
Choose an exchange rate that  starts with the first letter of your last name.  If you cannot find an exchange rate using the first letter of you last name, use the second letter in your last name and so on until you find an exchange rate.
a)  Write down the values of this exchange rate in January 2001 (2001  01) and January 2002 (2002  01).  If your exchange rate is not reported for January 2002, choose December 2001 as the second period.  What is the most likely explanation for the missing value of the exchange rate in January 2002?

Given the exchange rate for the two periods, has the value of the US dollar increased or decreased?

b) Now plot this exchange rate, from 1980 to the latest data available, using the ETS graph capability.
Click on the link ' Gif chart'. (you should see the chart for your exchange rate starting in 1990).
Scroll down the page and change the starting year from 1990 to 1980.
Then click on 'Make Chart'.
Print out the chart and bring to class with you.

2.
Suppose you can buy and sell currencies in New York and London.
Given the following exchange rates:
London                                                N.Y.
1 british pound = 1.5 Euros                    $1 = 1.5 Euros
1 british pound = $2                              $1 = 1/2 british pound

a) Is there an opportunity to make a profit?  Explain.
b) Is the dollar over- or under-valued in NY?  What about in London?  Are these differences likely to exist for a long time?