Older MCQs might not have the typical A, B, C,
D
choices. They
have choices 1, 2, 3, and a combination of them is the answer. Below is the key that maps such
combinations to the answer.
A
1, 2 and 3 are correct
B
1 and 2 only are correct
C
2 and 3 only are correct
D
1 only is correct
Definition of foreign exchange rate. Determination of foreign exchange rate in foreign exchange market: Floating and fixed systems. Causes of foreign exchange rate fluctuations: Including changes in demand for exports and imports, changes in the rate of interest, speculation, and the entry or departure of MNCs. Consequences of foreign exchange rate fluctuations: The effects of foreign exchange rate fluctuations on export and import prices and spending on imports and exports via the PED. The difference between, and the advantages and disadvantages of, a floating foreign exchange rate and a fixed foreign exchange rate system.
The components of the current account of the balance of payments – trade in goods, trade in services, primary income and secondary income. Calculation of deficits and surpluses on the current account of the balance of payments and its component sections. Causes of current account deficit and surplus. Consequences of current account deficit and surplus: Impact on GDP, employment, inflation and foreign exchange rate. Policies to achieve balance of payments stability: The range of policies available to achieve balance of payments stability and how effective they might be.
