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Via Afrika Publishers 9. Fluctuations in the exchange rate Factors that determine exchange rates are
• Inflation
•
Interest rates • Trade balance
• Terms of trade
• Government debt
• Political
and economic instability • Employment outlook of a country.
Questions 1. What does the phrase
foreign exchange mean?
(4)
2. What does the phrase
Gross Domestic Product mean?
(4)
3. What do you understand by the phrases
strong and weak currencies?
(4)
4. Name three effects of a weak currency
(6)
5. List the different factors
that determine exchange rates (14)
6. List two effects a fall in the value of the South African rand has on tourism
(4)
7. Name the two ways exchange rates are quoted
(4)
8. What are the steps that need to betaken to determine an exchange rate
(6)
9. List three
effects of a strong currency (6)
10. What is the multiplier effect and its link to the GDP
(4)
