1. What is a floating exchange rate system and what factors influence the level of a country’s exchange rate?
A floating exchange rate is when the price of money is determined only by demand and supply, no government intervention occurs. The factors, which influence the level of a country’s exchange rate are the demand and supply for the exchange rate, exports, imports and investment. Changes in trade flows (tourism), changes in cross-borders investment flows, speculation
ZG
Related Economics IB answers
All answers ▸A government decides to Impose an indirect tax on fast food. Discuss the effects for the stakeholders in these markets.
Using a price ceiling diagram, analyse the impact a maximum price might have on the market for food.
What is the demand and the supply in a market ? How can you draw them how do you derive the optimal price and quantity *?
Evaluate a fixed exchange rate system