find_someone_who_.docx
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As a way of recapping some content from Year 12 complete the "Find Someone Who..." activity below. Extra credit for the most interesting and exotic answers!!
A summary of the achievements of Economics students in the Class of 2018 and key dates for the Class of 2019

4.B.EXCHANGE RATES AND THE BALANCE OF PAYMENTS

4BA: eXCHANGE rATES:

  • Explain how the value of an exchange rate in a floating system is determined by the demand for, and supply of, a currency. 
  • Draw a diagram to show the determination of exchange rates in a floating exchange rate system. 
  • Calculate the value of one currency in terms of another currency. 
  • Calculate the exchange rate for linear demand and supply functions. 
  • Plot demand and supply curves for a currency from linear functions and identify the equilibrium exchange rate. 
  • Using exchange rates, calculate the price of a good in different currencies. 
  • Explain the factors that lead to changes in currency demand and supply. 
  • Distinguish between a depreciation of the currency and an appreciation of the currency. 
  • Draw diagrams to show changes in the demand for, and supply of, a currency.
  • Calculate the changes in the value of a currency from a set of data.
  • Evaluate the possible economic consequences of a change in the value of currency.
  • Describe a fixed exchange rate system involving commitment to a single fixed rate.
  • Distinguish between a devaluation of the currency and a revaluation of the currency.
  • Explain, using a diagram, how a fixed exchange rate is maintained. 
  • Explain how a managed exchange rate operates.
  • Examine the possible consequences of overvalued and undervalued currencies.
  • Compare and contrast a fixed exchange rate system with a floating exchange rate system.

why: PROBLEMS ARISE IN THE CONTEXT OF INTERNATIONAL MONETARY FLOWS THAT AFFECT A COUNTRIES ECONOMIC FORTUNES
hOW: consider some real world examples of problems arising in international monetary flows and participate in an introductory simulation to consider some of the major themes in foreign exchange.

Lesson 1: Exchange rATE DETERMINATION

​Key IDEA:

The demand for foreign currencies generates a supply of domestic currency; and demand for domestic currency generates a supply of foreign currencies, In a simple two-currency example using pounds and yen, it follows that:

Demand for pounds = Supply of yen
Demand for yen = Supply of pounds
INSTRUCTIONAL VIDEOS
7. Speculation

Summary of the causes of changes in exchange rates:

  1. Foreign demand for a countries exports
  2. Domestic demand for imports
  3. Relative interest rate changes
  4. Relative rates of inflation
  5. Investment from abroad
  6. Changes in income
  7. Speculation
  8. ​Use of foreign currency reserves

exchange rate simulation:
CONCEPTS:
  • Exchange rates
  • Money
  • Markets
  • Supply
  • Demand
  • Currency exchange
  • ​Floating exchange rates
  • Demand
  • Supply
  • Market clearing price
  • Transaction cost
key_points_-_exchange_rate_determination.docx
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Markets bash Argentina's and Turkey's currencies again

THE first YouTube video, posted in 2005, showed the site's 25-year-old co-founder standing in front of elephants at the San Diego zoo. One of its most recent videos is a little different: it shows Argentina's president, Mauricio Macri, explaining why he needs the IMF to stand in front of the bears destroying his country's currency.

Why countries like Argentina and Turkey fret about exchange rates

IMAGINE if Milton Friedman had been put in charge of a central bank, only to lose his job for expanding the money supply too quickly. Or if Robert Shiller, the Nobel-prizewinning author of "Irrational Exuberance", were given a similar post, only to depart having allowed a stockmarket bubble to inflate.

The Big Mac index

THE Big Mac index is a lighthearted guide to whether currencies are at their "correct" level. It is based on the theory of purchasing-power parity (PPP), the notion that global exchange rates should eventually adjust to make the price of identical baskets of tradable goods the same in each country.

Bitcoin and other cryptocurrencies are useless

AN OLD saying holds that markets are ruled by either greed or fear. Greed once governed cryptocurrencies. The price of Bitcoin, the best-known, rose from about $900 in December 2016 to $19,000 a year later. Recently, fear has been in charge.

Home Learning:
​Either/and
Complete notes 381 to 386 in tragakes
​Complete questions 1 to 17 below

3.2_-_exchange_rates.docx
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what_explains_changes_in_currencies.docx
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brazilian_case_study.docx
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exchange_rates_-_consequences_only.docx
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Paper 1 - Part a qUESTION
With the aid of a diagram explain 2 causes of a change in the exchange rate of a country's currency (10 marks)

Complete the Part a question from Paper 1 above. It should take you no more than 25 minutes. When you have completed this ask your teacher for the answer key and mark scheme.

Floating, Fixed, pegged and managed float
How: Develop understanding of the advantages and disadvantages of each system by looking at these systems of exchange.
Why: The exchange rate system is a key determinant of monetary flows and wealth in the global economy.
fixed_managed_or_floating.docx
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​https://www.xe.com/currencycharts/?from=AUD&to=PGK&view=5Y
Explaining changes in the foreign exchange markets: Using Prezi Video explain how:
The value of a currency is maintained in a floating  exchange rate system
What causes a currency appreciation and depreciation
Use the scenarios above to explain how currency values are maintained in a fixed exchange rate (at least 3)
What are the pros and cons of an undervalued exchange rate and an overvalued exchange rate?
What are the pros and cons of the floating, managed and fixed exchange rate system?
ENSURE THAT YOUR PRESENTATION CONTAINS DIAGRAMS DEMONSTRATING CHANGE, MAKE SURE YOU EXPLAIN WHY!
Year 13 Group 3 Films
Finlay, Kieran, Lars
Batyr, Henry - Part 1
Batyr, Henry - Part 2
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Year 13 Group 6 Films

aCTIVITY 1: reflecting on the simulation

Go back to the discussion forums that contain our driving questions, reflect on the forum below or another suitable question and write down the key understandings that you gained from the simulation:
"How much harmonization is desirable"

How fixed would a gold standard actually be?

ON Monday, your blogger took part in a BBC radio discussion involving Detlev Schlichter, the author of Paper Money Collapse: the Folly of Elastic Money and the Coming Monetary Breakdown. Mr Schlichter's argument will be familiar to fans of Ron Paul, although they are less often aired on this side of the Atlantic.

What was decided at the Bretton Woods summit

ON JULY 1ST 1944 the rich world's finance experts convened in a hotel in the New Hampshire mountains to discuss the post-war monetary system. The Bretton Woods system that emerged from the conference saw the creation of two global institutions that still play important roles today, the International Monetary Fund (IMF) and the World Bank.

Don't cheer a devaluation

THE pound has dropped to its lowest level against the dollar since March 2009, on fears that the support of Boris Johnson, London's mayor, for the Leave campaign has made Brexit more likely. While Mr Johnson's economic adviser, Gerard Lyons, manfully suggested on BBC Radio 4's The World at One that the decline was little to do with Brexit, the facts are against him.
the_history_of_currency_exchange_and_the_issue_of_fixed_vs_floating.docx
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Balance of payments
You should be able to:
  • Outline the role of the balance of payments. 
  • Distinguish between debit items and credit items in the balance of payments.
  • Explain the four components of the current account. 
  • Distinguish between a current account deficit and a current account surplus. 
  • Explain the two components of the capital account. 
  • Explain the three main components of the financial account. 
  • Calculate elements of the balance of payments from a set of data. 
  • Explain how the current account balance is equal to the sum of the capital account and financial account balances.
  • Examine how the current account and the financial account are interdependent. 
  • Explain why a deficit in the current account of the balance of payments may result in downward pressure on the exchange rate of the currency.
  • Discuss the implications of a persistent current account deficit.
  • Explain the methods that a government can use to correct a persistent current account deficit.
  • Evaluate the effectiveness of the policies to correct a persistent current account deficit.
  • State the Marshall–Lerner condition. 
  • Apply the Marshall–Lerner condition to the effect of devaluation/depreciation on the current account. 
  • Explain the J-curve effect, with reference to the Marshall–Lerner condition. 
  • Explain why a surplus in the current account of the balance of payments may result in upward pressure on the exchange rate of the currency. 
  • Discuss the possible consequences of a rising current account surplus.
bop_textbook_section.pdf
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What a rising current-account surplus means for the euro area

GREECE'S third bail-out programme came to an end on August 20th. A look at the causes of the country's near-decade of crisis illustrates how external imbalances can reflect underlying troubles. Gaps in public finances, as well as investments in property, were financed by borrowing from Germany and other northern European countries.

Why is macroeconomics so hard to teach?

LAST month Nick Rowe had a bad dream. It was five minutes before the first class of the autumn term at Carleton University in Ottawa, where he has long taught macroeconomics. But he could not find the classroom. Then he woke up and remembered with relief that he had just retired.
3.3_balance_of_payments__1_.pdf
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usa_bop.docx
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Balance of payments - Office for National Statistics

All economic transactions between residents of the UK and the rest of the world.

uk_balance_of_payments_the_pink_book_2018.pdf
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Germany's low investment rate leaves its infrastructure creaking

A VERDANT suburb in the northern state of Schleswig-Holstein, Pinneberg epitomises the Germany of record consumer confidence, booming exports and a bulging federal budget surplus. Here commuters stream off trains from Hamburg (local unemployment is 4.9%), climb into big cars and zip home to neat houses with solar panels on the roof.

China may soon run its first annual current-account deficit in decades

T HAT CHINA sells more to the world than it buys from it can seem like an immutable feature of the economic landscape. Every year for a quarter of a century China has run a current-account surplus (roughly speaking, the sum of its trade balance and net income from foreign investments).

What is a current-account deficit?

Explaining the world, daily The Economist explains ECONOMISTS often worry about a country's current-account deficit. Turkey's is around 4% of GDP. Last year Britain's was around 4.5% of GDP. America has also run a large current-account deficit for years. What does this mean, and should people worry about it?

Germany's current-account surplus is a problem

WHAT awkward timing. On February 9th Germany reported the world's largest current-account surplus, of about €270bn (almost $300bn), beating even China's. Meanwhile, the country with the world's biggest deficit remains America, which under its new president, Donald Trump, is browbeating friend and foe alike in the name of putting "America first".

Exchange rates student presentations: