Exchange rates (Aspire)

Factors affecting Exchange rates

100

The definition of an exchange rate

What is the value of one currency in terms of another?

200

There are two main factors affecting exchange rates

What is financial flows and international trade?

300

Countries that rely heavily on exports often prefer this type of exchange rate system because it provides stability and keeps their goods competitively priced abroad.

What is a fixed or managed exchange rate system?

400

A country that wants to cushion its economy from external shocks, like falling oil prices, is most likely to adopt this type of exchange rate policy.

What is a floating exchange rate policy?

500

The US is in a trade_____ with Jamaica

What is a trade surplus?

Impacts of Exchange rates

100

True or False

If Zimbabwe cuts 12 zeros from their currency, the number value is much greater, so the currency is stronger

False

200

Name three economic factors exchange rates can influence.

Inflation, trade, and foreign investments

300

The U.S dollar appreciates. What will the trade impacts be?

Imports will become cheaper and exports will become more expensive.

Global Economy & Trade Dynamics

100

What Happens to a Country’s Trade Deficit During an Economic Boom?

During an economic boom, a country’s trade deficit usually grows because spending and investment inflows rise, strengthening the currency and increasing imports.