Cards (50)

    • Exchange rates represent the value of one currency in terms of another
    • What is one aspect influenced by exchange rates according to the study material?
      Trade
    • Exchange rates affect the cost of international travel and tourism.
    • If the exchange rate between USD and EUR is 1:0.88, 1 USD can be exchanged for 0.88 EUR.
    • How many primary types of exchange rate systems are there?
      Three
    • Match the type of exchange rate system with its characteristic:
      Fixed ↔️ Stability and predictability
      Floating ↔️ Flexibility to economic shocks
      Managed ↔️ Balance between stability and flexibility
    • Under a fixed exchange rate system, monetary policy autonomy is reduced.
    • A floating exchange rate system allows monetary policy autonomy
    • Which economic factor influences exchange rates?
      Inflation rates
    • Higher interest rates in a country can strengthen its currency.
    • Psychological factors such as investor confidence can drive exchange rate fluctuations
    • What happens to a country's exports when its currency devaluates?
      Exports become cheaper
    • Exchange rate volatility can deter foreign investment due to increased uncertainty.
    • What is the impact of currency appreciation on exports?
      More expensive
    • Currency appreciation makes imports cheaper.
    • Exchange rate volatility can deter foreign investors due to increased uncertainty
    • What happens to British exports if the GBP depreciates against the EUR?
      They become cheaper
    • Exchange rates determine the value of one currency in terms of another.
    • Exchange rates influence import and export prices
    • Match the type of exchange rate system with its characteristic:
      Fixed ↔️ Stability and predictability
      Floating ↔️ Flexibility to economic shocks
      Managed ↔️ Balance between stability and flexibility
    • Which exchange rate system uses a fixed peg to another currency or commodity?
      Fixed
    • Hong Kong uses a fixed exchange rate system, pegging its currency to the USD
    • Economic factors like inflation and interest rates can influence exchange rates.
    • Order the factors influencing exchange rates by category:
      1️⃣ Economic factors
      2️⃣ Political factors
      3️⃣ Psychological factors
    • What type of factor is news and sentiment that influences exchange rates?
      Psychological
    • A currency devaluation makes exports cheaper
    • Exchange rate volatility encourages foreign investment.
      False
    • How do exchange rates influence international competitiveness?
      By affecting export prices
    • Match the exchange rate scenario with its effect on inflation:
      Currency depreciation ↔️ Increases imported goods prices
      Currency appreciation ↔️ Decreases imported goods prices
    • Higher interest rates attract foreign investment
    • What is the effect of a stable exchange rate on economic growth?
      Reduces investment risks
    • Factors influencing exchange rates can be categorized into economic, political, and psychological factors.
    • Higher inflation reduces the value of a currency.
    • Why did the USD weaken in 2023 according to the example in the material?
      High inflation
    • Higher interest rates attract foreign investment and strengthen the currency.
    • Higher GDP growth strengthens a country's currency.
    • Match the category of factors influencing exchange rates with their examples:
      Economic ↔️ Inflation rates
      Political ↔️ Government policies
      Psychological ↔️ News and sentiment
    • Political stability in a country strengthens its currency by attracting investment.
    • What example is given to illustrate the impact of political stability on exchange rates?
      Swiss franc
    • Higher interest rates can weaken a currency.
      False