Unit 4: The Global Economy
Topic 4.5: Exchange Rates Questions
Practice 20 exam-style questions for IB Economics Topic 4.5. Review the question stems below, then unlock the full Question Bank to access markschemes, model answers, and AI grading.
11 mark
In a floating exchange rate system, the value of a currency is determined by:
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If a country's currency appreciates, which of the following is most likely to occur?
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A depreciation of a country's currency would most likely lead to:
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In a fixed exchange rate system, the value of a currency is:
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A depreciation of a country's currency would most likely lead to:
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Distinguish between an appreciation and a depreciation of a currency.
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Distinguish between an appreciation and a depreciation of a currency.
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In a fixed exchange rate system, the value of a currency is:
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If a country's currency appreciates, which of the following is most likely to occur?
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In a floating exchange rate system, the value of a currency is determined by:
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Using a demand and supply diagram for the foreign exchange market, explain how an increase in foreign direct investment into a country affects its exchange rate.
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In the foreign exchange market, the supply of a domestic currency is created by:
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Explain how an appreciation of the exchange rate may affect inflation in a country.
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Distinguish between a fixed exchange rate and a managed float exchange rate system.
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Which of the following would cause a depreciation of a country's currency in a floating exchange rate system?
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Explain how a central bank maintains a fixed exchange rate when there is downward pressure on the currency.
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An increase in demand for a country's exports would most likely cause its currency to:
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To prevent its currency from depreciating below the fixed rate, a central bank must:
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Explain the effects of a depreciation of the exchange rate on a country's export and import sectors.
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Explain how the exchange rate is determined in a floating exchange rate system.
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