Exchange Rates

Question 1

What is exchange rate defined

Answer 1

relative value of one currency in terms of another

Question 2

What is currency defined

Answer 2

system of money used in a country or group of countries

Question 3

What is it called when exchange rate rises

Answer 3

an appreciation (money gets stronger)

Question 4

What is it called when exchange rate lowers

Answer 4

a depreciation (money weakens)

Question 5

Generalized what causes exchange rates to change

Answer 5

Shifts in supply and demand of currency

Question 6

What is a rise in exchange rate caused by generalised
appreciation

Answer 6

Increase in demand (right shift)
Decrease in supply (left shift)

Question 7

What is most of the supply of a currency dictated by

Answer 7

economic groups supplying their money in exchange for another to buy their GaS (i.e buy goods and services from other countries)

Question 8

What is most of the demand for a currency dictated by

Answer 8

economic groups who want to buy goods and services in the country’s currency

Question 9

What is a decrease in exchange rate caused by generalised
depreciation

Answer 9

decrease in demand (left shift)
increase in supply (right shift)

Question 10

What 6 Factors will influence demand supply themselves

Answer 10

Current account - i.e deficit or surplus
Inflation
Interest rates
Economic Growth
Speculation
Political and social stability