Learning objectives
Define an exchange rate and explain how a floating exchange rate is set by the demand for and supply of a currency
Distinguish depreciation from appreciation of a floating currency and calculate percentage changes in an exchange rate
Analyse the causes of changes in a floating exchange rate, such as interest rates, relative inflation, trade flows, investment and speculation
Use AD/AS analysis to show how depreciation or appreciation affects real output, the price level and employment
(A Level) Explain fixed and managed exchange rates, devaluation and revaluation, and apply the Marshall–Lerner condition and the J-curve to a depreciation
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