Summary
Summary Exchange Rates: A* A-level notes
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These notes provide you with all the required knowledge (and some more) on the Exchange Rates topic, for the AQA A-level Economics Paper 2&3
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Exchange ratesTypesofexchageratesystws .fi
edgaermueut coutral bank sets the exchange rate
went central bank will maintain the exchange rate at
agar
thetargetrate controlling interestrates
by or
by buying selling
the currency using foreign currency reserves to keep supply
dead stable
Floating free to mac with changing supply demand of a
currency
Hybrid mixture of fixed floating
Managedfloating the exchange rate is mainly left to
war het forces but the
garment will occasionallyintervene
to influence the exchange rate.ES to reduce theimpact of an
acadie shock on the value ofits
currency
Sui fixed the exchange rate is only allowedto fluctuate
within a set band of exchange rates
Pegged of the currency is pegged to another
the value
can be madperiodically
адф of currencies
This
currency peg
or as
they armed sees lit
, IйIУ1Ёt
value of currencies
a
adjusteddirect саратов на
Realexchange rate nominalrate adjustedto takeprice levels into
account
Bilateralexchange rate the couparison of
justtwo currencies
Effective exchange rate a country's is
paredto a basket
currency can
of currencies usually its trading partners It is aweightedaverage
theproportion of the country's trade with eachpartnerdetermines
У
the size of theweighting The aim is
tore a
summary of theoverall
value of a
currency coupand to
severalothers
system
Чi1GЙ marred
Can help to reduce a BOPcurrentaccountdeficit
a BOPdeficit will lead to a fall in the value of the currency
so I dead for exports imports is moderatelypriceelastic
exports will increase andreports will decrease reducing the BOP
deficit
Governmentdoesn'thave to use monetarypolicy to maintain the
exchange rate so it can use it for other objectives
Automatic stabiliser protectionagainst external shocks
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