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AP Macroeconomics 6.5 Changes in the Foreign Exchange Market and Net Exports Questions

Practise connecting currency values to relative prices and trade flows, then follow net-export changes into current accounts, aggregate demand, and policy outcomes.

Syllabus
Effective Fall 2022
Course
AP Macroeconomics

Exam points

  • connect appreciation or depreciation to relative prices, imports, exports, and net exports
  • judge how a currency change affects exporters, importers, tourists, and international asset holders
  • translate the net-export result into a current-account direction and aggregate-demand shift
  • trace an interest-rate or monetary-policy change through the currency and net exports to aggregate demand
  • explain the exchange-rate feedback that can moderate an initial import or export demand change

Covered syllabus points

MKT-5.F—Explain (using graphs as appropriate) how changes in the value of a currency can lead to changes in a country’s net exports and…

Question 1

[Maximum number: 1]

Assume that the economy of Vortania is in long-run equilibrium.

Based solely on the change in the international value of the Vortanian crown shown in part C, will Vortania's net exports increase, decrease, or remain the same in the short run?

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