IGCSE Economics: Exchange Rate

What is meant by a depreciation in the value of a currency?

• A rise in its external value

• A fall in its internal value

• A rise in its internal value

• A fall in its external value

What is likely to cause a rise in a country’s foreign exchange rate?

• a fall in its exports of goods and services

• a fall in its imports of goods and services

• a fall in its inflow of income

• a rise in its outflow of transfers

Which government policy is most likely to increase the volume of exports?

• devaluation

• embargoes

• quotas

• tariffs

In 2015, the value of the South African currency (the rand) depreciated against the US dollar.

What effect did this have on the US economy?

• Exports to South Africa became more expensive.

• The current account deficit of the US decreased.

• The US experienced higher levels of inflation.

• Unemployment in the US decreased

Which name is given to the external value of a currency in terms of another currency?

• the balance of trade

• the exchange rate

• the relative inflation rate

• the supply of money