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2.6.4 Exchange rate systems

What determines the exchange rate in a freely floating system?

A

The demand for and supply of the currency on the foreign exchange market, without government intervention.

B
  • Exports
  • Inflows of investment
C

It falls from $150 to $120, making the export cheaper abroad.

D

Demand for exports and imports must be sufficiently price elastic - the Marshall-Lerner condition.

2.6.4 Exchange rate systems Flashcards

  1. A Level
  2. /Economics
  3. /2.6.4 Exchange rate systems

Flashcards for AQA A Level Economics 2.6.4 Exchange rate systems, covering the key terms, economic models and case studies you need to recall for Paper 1, Paper 2 and Paper 3. 21 cards, matched to the AQA A Level Economics (7136) specification.