Exchange Rates and the Balance of Payments (HSC SSCE Economics): Flashcards
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Fixed exchange rate system requirement
Fixed exchange rate system requirement
Govt/central bank intervention to maintain predetermined value
Devaluation meaning
Devaluation meaning
Official exchange rate is lowered
Revaluation meaning
Revaluation meaning
Official exchange rate is increased
Australia's managed flexible peg period
Australia's managed flexible peg period
November 1976 to December 1983
Import rise → exchange rate effect
Import rise → exchange rate effect
A$ depreciates (more supplied to forex markets)
Appreciation effect on exports
Appreciation effect on exports
Exports become more expensive in foreign markets
Depreciation effect on exports
Depreciation effect on exports
Exports become cheaper in foreign markets
Appreciation effect on debt servicing
Appreciation effect on debt servicing
Cost of servicing foreign debt falls
Depreciation effect on debt servicing
Depreciation effect on debt servicing
Servicing foreign debt becomes more expensive
Valuation effect definition
Valuation effect definition
Immediate A$ value change of foreign debt/assets from FX move