Foreignexchange rate …IGCSE Economics &Business Studies

At the end of the lesson, students should be able to:
Define foreign exchange rate - Floating and fixed systems. Determine foreign exchange rate in exchange market - by the demand for and supply of a currency in the exchange market and determine the equilibrium foreign exchange rate. Causes of exchange rate fluctuations - including changes in demand for exports and imports, changes in the rate of interest, speculation, and the entry or departure of MNCs. Consequences of exchange rate fluctuations - effects of exchange rate fluctuations on export and import prices and spending on imports and exports via the PED. Floating and fixed foreign exchange rates - the difference between, and the advantages and disadvantages of, a floating exchange rate and a fixed foreign exchange rate system. ‘Class Activities with Answers.’