Please enable JavaScript.
Coggle requires JavaScript to display documents.
EXCHANGE RATES - Coggle Diagram
EXCHANGE RATES
-
-
currency deppreciation:
-
-
-
neg: less affordability & quantity of imports, foreign goods more expensive, more inflation, less growth of import business, more value of foreign debt
currency appreciation:
-
-
pos: more affordability & quantity of imports, foreign goods affordable to consumers & keeps low inflation, decrease value of net foreign debt
neg: less quantity of exports, less AD/production, econ growth and jobs
net foreign debt
-
trade weighted index:
avg AUD value against basket of foreign currencies of trading partners; weighted according to relative trading importance w/ aus
difference in value between what aus households, businesses & gov have borrowed from & owe overseas minus what aus has lent or invested abroad
-
types of exchange rates
-
dirty (managed) float:
value determined by supply & demand for currency; RBA intervenes by buying/selling home currency using their reserves fo foreign currency to push demand up or down
fixed:
-
can be set high artificially & maintained by buying & selling or setting low to undervalue currency & increase money supply, econ growht & employment
-
foreign exchange markets
-
buyers & sellers monitor & predict economic, social & political changes of countries to determine which currency to buy or sell
-
-