Chapter 16- exchange rates Flashcards

1
Q

floating exchange rate

A

is determined by market forces. It reflects the demand for the currency, to buy its products or invest there, and the supply of currency, which arises from buying imports and capital flows abroad.

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2
Q

Appreciation

A

refers to rising value. when the exchange rate appreciates, we get more for our pound.

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3
Q

depreciation

A

means falling values. Exchange rate depreciation means that a unit of currency buys less. There will be a gain in competitiveness as export prices fall.

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4
Q

Boom

A

a time of rapid economic growth, rising demand, lower unemployment, rising inflation

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5
Q

stagflation

A

is an unattractive combination of stagnant GDP with prices rising at uncomfortable rates

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6
Q

leading indicators

A

early signs of the direction of economic activity

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7
Q

lagging indicators

A

are measures which are slow to reflect the current state of the economic activity

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