Saturday, March 14, 2009

Unit 2: Appreciating/depreciating exchange rates

An interesting article from economics student on exchange rates

http://rapidrevision.co.uk/economics-student/2009/03/14/currency-wars-competitive-depreciations/

a) Why is a depreciating £ good for British exporters?
b) What effect would the depreciation have on those businesses who import goods in to the UK?
c) Using a S&D diagram, explain why the Swiss Franc has appreciated
d) Using a S&D diagram, explain the effect of the Swiss authorities policy “to purchase foreign currency on the foreign exchange market to prevent any further appreciation of the Swiss franc against the euro”

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