6.4 Exchange rates (available in Sept)

In this chapter you will learn how to:

• define the meaning of an exchange rate
• explain how a floating exchange rate is determined
• explain the difference between depreciation and appreciation of a floating exchange rate
• analyse the causes of changes in a floating exchange rate
• discuss, using AD/AS analysis, the impact of exchange rat
• changes on the domestic economy’s equilibrium national income and the level of real output, the price level and employment.