8/10/2019 HSC Study Guide Exchange Rates

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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*