Exchange Rate Systems (AQA A-Level Economics): Flashcards
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Exchange rate
Exchange rate
External price of one currency in terms of another
Currency appreciation/strengthening
Currency appreciation/strengthening
Exchange rate rises; pound buys more foreign currency
Currency depreciation/weakening
Currency depreciation/weakening
Exchange rate falls; pound buys less foreign currency
Sterling Exchange Rate Index (ERI)
Sterling Exchange Rate Index (ERI)
Trade-weighted average of pound vs trading currencies
Real exchange rate
Real exchange rate
Currency value adjusted for inflation
Freely floating exchange rate
Freely floating exchange rate
Market forces alone determine the exchange rate
Rigidly fixed exchange rate
Rigidly fixed exchange rate
Government maintains rate at a specific value
Adjustable peg exchange rate
Adjustable peg exchange rate
Fixed rate but central peg can be changed
Dirty floating exchange rate
Dirty floating exchange rate
Officially floating but with central bank intervention
Currency union
Currency union
Countries sharing a common single currency