4.3.3.2c - Factors influencing floating exchange rates: • relative interest rates • relative

Factors influencing floating exchange rates:; relative interest rates; relative inflation rates (purchasing power parity theory); current account of the balance of payments; strength of the economy; capital flight; expectations and speculation; global factors, e.g. falls in commodity prices.

Use c - factors influencing floating exchange rates: • relative interest rates • relative to connect the rule to the data and decision in the question.

This matters because c - factors influencing floating exchange rates: • relative interest rates • relative determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply c - factors influencing floating exchange rates: • relative interest rates • relative to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: c - Factors influencing floating exchange rates: • relative interest rates • relative is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.