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HSC Study Guide Exchange Rates (Term 4 Week 7)
Readings:
Chapter !Exchange Rates"
#pdated Ec$n$mics %&'& Editi$n art p*+' , '&%
Key terms:ppreciati$n -and.ag$n e//ect -i0atera0 exchange rate
1epreciati$n 1irect 2u$tati$n 3ndirect 2u$tati$nExchange rate Exchange rate $0ati0ity 5ersh$$ting
Specu0ati$n #ndersh$$ting Trade .eighted index
6a0uati$n e//ect 6$0ume e//ect
Short Response:
'* Definethe term exchange rate*%* Distinguishet.een the direct and indirect meth$ds $/ 2u$ting the exchange rate*
* Outline.here and h$. /$reign exchange is traded*4* Explain the di//erence et.een the -i0atera0 and Trade Weighted 3ndex measures $/
the exchange rate*8* Outlinethe /act$rs that a//ect the demand and supp0y $/ ustra0ian d$00ars*
9* #sing an appr$priate0y 0ae00ed diagram: explain h$. the /0exi0e ($r /0$ating)
exchange rate system $perates t$ determine a0ue $/ the ustra0ian d$00ar*7* Discussthe adantages and disadantages $/ a /0exi0e exchange rate system*
+* #se diagrams t$ distinguish et.een an appreciati$n and a depreciati$n $/ the
ustra0ian d$00ar under a /0$ating exchange rate mechanism*;* Describe the p$ssi0e causes and e//ects $/ an exchange rate depreciati$n and
appreciati$n*
'&* Discussp$ssi0e reas$ns .hy the Resere -ank $/ ustra0ia (R-) might interenet$ a//ect the exchange rate*''* Distinguishet.een direct and indirect interenti$n in the /$reign exchange market
y the R-
Extended Response:
In your answer you will be assessed on how well you:
use economic data
apply economic terms, concepts, relationships and theory
present a sustained, logical and well-structured answer to the question
'* Analysethe /act$rs that a//ect the demand and supp0y $/ ustra0ian d$00ars and
explain the c$nse2uences $/ m$ements in the exchange rate /$r the ustra0ianec$n$my*
%* Distinguishet.een the p$ssi0e causes and e//ects $/ $th a depreciati$n and an
appreciati$n $/ the ustra0ian d$00ar $n the ustra0ian ec$n$my*
* Explainh$. the a0ue $/ the ustra0ian d$00ar is determined under the /0$ating
exchange rate system and discuss.hy and h$. the Resere -ank interenes in the
/$reign exchange market*