IB Exchange Rate - Complete Guide for IB Economics

What Is an Exchange Rate?

• Definitions, theory and basic examples
  Exchange Rates: When Currencies Go Dancing

Types of Exchange Rate Systems

• Floating Exchange Rate

• Fixed Exchange Rate
  Fixed Exchange Rates: When Governments Play Currency Babysitter

• Managed Float

Causes of Currency Appreciation and Depreciation

• Interest rates

• Inflation

• Confidence & speculation

• Trade balances

• Government/Central Bank actions

Effects of Exchange Rate Changes

• On exports/imports

• On inflation

• On growth/employment

• On the current account (Marshall-Lerner + J-Curve)

Diagrams to Master

• Currency appreciation/depreciation (S&D)

• Fixed rate central bank intervention

• J-Curve effect

Real-World Case Studies

• Brexit & GBP

• Turkish lira collapse

• Swiss franc unpegging

• Chinese yuan manipulation accusations

Evaluation Tips for IB

• Stakeholders (exporters, consumers, governments)

• Short-run vs long-run impact

• Role of central banks and confidence

• Links to inflation, policy, economic growth

For access to all key diagrams, model answers, and exam strategies,

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