4.3 Exchange rates 2

What does it mean to depreciate in value?

• to gain in value

• to remain the same in value

• to fall in value

• to gain value by 100 fold

Which of the following would normally lead to a rise in the exchange rate?

• Increased UK exports

• Increased UK imports

• Lower inflation in countries the UK trades with

• Lower UK interest rates

A depreciation of the domestic currency leads to rise in -

• exports

• imports

Imports of goods and services raises the ................................of/for foreign exchange.

• supply

• demand

What will be the effect of exchange depreciation on exports-

• increase in exports

• decrease in exports

In 2020 the dollar to the euro exchange rate was $1.40= e1.00 so you needed $1.40 to get 1e. Today the rate is $1.31 = 1e. What does this mean?

• The euro has depreciated in value against the dollar

• The euro has appreciated in value against the dollar

• The value of the euro has remained the same against the dollar

The movement of money around the world to take advantage of differences in interest rates and exchange rates is known as ______________________.

A country X is seeing a surplus of $ 20 million in its balance of trade, deficit 30 $million in net transfers and a surplus of $10 million in its net income. The current account is balanced.

• Yes

• No