Learning objectives
Define a foreign exchange rate, a floating exchange rate, an appreciation and a depreciation
Explain the reasons for buying and selling a currency: trade in goods and services, speculation, government intervention, payments of profit, interest and dividends, the remittances of workers and investment between countries
Explain, with a diagram, how the demand for and the supply of a currency determine its equilibrium exchange rate
Explain how changes in the demand for exports and imports, changes in the rate of interest and speculation cause an exchange rate to fluctuate
Analyse how an appreciation or a depreciation changes the prices of exports and imports and the quantities of them that are demanded
Continue with a revision plan
These learning objectives are available to everyone. Sign in with an eligible plan to read the full note and worked examples.