Home › IB Diploma Economics › Chapter 25
IB Diploma · Economics · Chapter 25
Ch 25 4.5 Exchange rates: complete notes
Neat, exam-ready notebook-style notes for Ch 25 4.5 Exchange rates, following the IB Diploma syllabus, SL and HL. This chapter is part of the complete Economics Notes for IB Diploma Students (SL and HL): All 30 Topics.
Test yourself: IGCSE Economics online MCQ tests: 91 tests with solutions, Set 1 of every chapter free →
Free preview: Ch 25 4.5 Exchange rates notes
A quick look at the chapter from our IB Diploma Economics notes. The full chapter notes have the detailed explanations, diagrams and practice questions with answers.
Topics in this chapter
- What you must be able to do
- Floating exchange rates: determination AO2 AO4
- Changes in demand and supply for a currency AO2 AO4
- Consequences of changes in the exchange rate AO3 AO4
- Fixed exchange rates AO2 AO4
- How a fixed rate is maintained
- Managed exchange rates: overvalued and undervalued currencies AO2 AO4
- Fixed versus floating exchange rate systems AO3
- Spectrum
“I can” checklist: what you must be able to do
- I can draw the market for a currency and show appreciation and depreciation, and calculate % changes in the rate.
- I can convert the price of a good between two currencies and calculate the effect of a rate change.
- I can explain how exports, imports, FDI, portfolio investment, remittances, speculation, relative inflation, interest rates, growth and central bank intervention change the rate.
- I can use AD/AS diagrams to evaluate consequences for inflation, growth, unemployment, the current account and living standards.
- I can explain devaluation, revaluation and how a fixed rate is maintained, with a diagram.
- I can explain overvalued and undervalued currencies in a managed system, with a diagram.
- HL: I can evaluate fixed against floating exchange rate systems.
What is inside the full chapter notes
- Concept notes with 6 worked examples (every number computed)
- Diagrams: currency market, appreciation and depreciation, fixed rate defended, over- and undervalued currency, AD/AS effects of depreciation
- Common mistakes and a "How to score" command-term box
- 12 Quick-check questions A-D, explained
- Paper 1 style (a) 10 + (b) 15 with mark scheme and markbands
- Paper 2 style data response (36 marks) with mark scheme
- Quick reference and "I can" checklist
What you get in the pack
- All 30 topics of IB Diploma Economics for students taking Standard Level or Higher Level (first assessment 2022): what economics is, demand, supply, market equilibrium, behavioural economics, elasticity, government intervention, externalities, public goods, asymmetric information, market power, equity, measuring economic activity, aggregate demand and supply, macroeconomic objectives, inequality and poverty, monetary policy, fiscal policy, supply-side policies, international trade, trade protection, economic integration, exchange rates, balance of payments, sustainable development, measuring development, growth and development strategies
- Every syllabus statement covered in order, each marked SL or HL, with clear notes, tables and diagrams drawn for these notes
- Every diagram the guide names, drawn and labelled, plus worked examples and model answers that show how to earn the marks
- Quick-check multiple-choice questions with explained answers, plus original Paper 1 (extended response), Paper 2 (data response) and, for HL, Paper 3 (policy) style questions with full mark schemes (no past-paper reprints)
- Common mistakes and a how-to-score command-term guide for every topic
- Quick-reference sheet and an "I can" checklist at the end of every topic
- Colour PDF and a black and white copy of every chapter for printing
- Independent notes for IB Diploma students; not endorsed by or affiliated with the International Baccalaureate Organization (IBO)
All chapters in this pack
- Ch 1 1.1-1.2 What is economics? and How do economists approach the world?
- Ch 2 2.1 Demand
- Ch 3 2.2 Supply
- Ch 4 2.3 Competitive market equilibrium
- Ch 5 2.4 Critique of the maximizing behaviour of consumers and producers
- Ch 6 2.5 Elasticity of demand
- Ch 7 2.6 Elasticity of supply
- Ch 8 2.7 Role of government in microeconomics
- Ch 9 2.8 Market failure: externalities and common pool resources
- Ch 10 2.9 Market failure: public goods
- Ch 11 2.10 Market failure: asymmetric information (HL)
- Ch 12 2.11 Market failure: market power (HL)
- Ch 13 2.12 The market's inability to achieve equity (HL)
- Ch 14 3.1 Measuring economic activity and illustrating its variations
- Ch 15 3.2 Aggregate demand and aggregate supply
- Ch 16 3.3 Macroeconomic objectives
- Ch 17 3.4 Economics of inequality and poverty
- Ch 18 3.5 Demand management: monetary policy
- Ch 19 3.6 Demand management: fiscal policy
- Ch 20 3.7 Supply-side policies
- Ch 21 4.1 Benefits of international trade
- Ch 22 4.2 Types of trade protection
- Ch 23 4.3 Arguments for and against trade control and protection
- Ch 24 4.4 Economic integration
- Ch 25 4.5 Exchange rates
- Ch 26 4.6 Balance of payments
- Ch 27 4.7 Sustainable development
- Ch 28 4.8 Measuring development
- Ch 29 4.9 Barriers to economic growth and/or economic development
- Ch 30 4.10 Economic growth and/or economic development strategies