Practise reading currency quotations, calculating appreciation or depreciation and explaining floating-rate demand and supply before evaluating trade, inflation and output effects.
The following exchange rates were recorded in the foreign exchange market.
Within which range of values should £ 1 exchange for $ ?
£ 1= less than $ 0.50
£1=between $0.50 and $1
£ 1= between $ 1 and $ 1.50
£ 1= more than $ 1.50
What is a disadvantage of operating a floating exchange rate system?
It makes it difficult to prioritise domestic economic policy aims.
It makes the prices of internationally traded goods less predictable.
It means that the government must keep significant foreign currency reserves.
It requires continuous government intervention in currency markets.
The graphs show the changes in the exchange rates of the pound sterling ( £ ) against the US dollar (US$) and the euro (€) between the years 2001 and 2003.
US\$ per £
What happened to the value of the £ between the years 2001 and 2003?
The £ appreciated against the US $ and depreciated against the €.
The £ appreciated against the US $ and the €.
The £ depreciated against the US $ and appreciated against the €.
The £ depreciated against the US $ and the €.