- Explain that the value of an exchange rate in a floating system is determined by the demand for, and supply of, a currency.
- Draw a diagram to show determination of exchange rates in a floating exchange rate system.
- Describe the factors that lead to changes in currency demand and supply, including foreign demand for a country’s exports, domestic demand for imports, relative interest rates, relative inflation rates, investment from overseas in a country’s firms (foreign direct investment and portfolio investment) and speculation.
- Distinguish between a depreciation of the currency and an appreciation of the currency.
- Draw diagrams to show changes in the demand for, and supply of, a currency.
- Evaluate the possible economic consequences of a change in the value of a currency, including the effects on a country’s inflation rate, employment, economic growth and current account balance.
- Calculate the value of one currency in terms of another currency.
- Calculate the exchange rate for linear demand and supply functions.
- Plot demand and supply curves for a currency from linear functions and identify the equilibrium exchange rate.
- Using exchange rates, calculate the price of a good in different currencies.
- Calculate the changes in the value of a currency from a set of data.
You will be given a copy of this to fill in... but if you lose it then here is one to download and print out...
plus a packet of Paper 3 style questions.