Exchange Rate Systems — AQA Past Paper Questions

Assess the view that floating exchange rates are always better than fixed exchange rates.

2.6.4 Exchange Rate Systems

Explain how a government or central bank can intervene to prevent the value of its currency rising.

2.6.4 Exchange Rate Systems

Explain how an appreciation of its currency is likely to affect a country’s rate of economic growth.

2.6.4 Exchange Rate Systems · 2.3.1 Growth and the Economic Cycle

Evaluate the costs and benefits for a country of joining a currency union, such as the eurozone.

2.6.4 Exchange Rate Systems

Explain why the value of a currency may fall in a floating exchange rate system.

2.6.4 Exchange Rate Systems

Assess the view that a depreciation of the pound against other currencies is likely to improve the UK’s macroeconomic performance.

2.6.4 Exchange Rate Systems · 2.6.3 The Balance of Payments

Using the data in Extract A (Figure 1), calculate the change in the effective exchange rate index, as a percentage, between November 2015 (point A) and November 2016 (point B). Give your answer to two decimal places.

2.6.4 Exchange Rate Systems

Extract C (lines 8–9) states ‘Trade deficits and surpluses may be self- correcting in a floating exchange rate system.’ With the help of a diagram showing the supply of and demand for a currency, explain how a floating exchange rate may help to correct a trade surplus.

2.6.4 Exchange Rate Systems · 2.6.3 The Balance of Payments