Compelete exchange rate notes covering topics such as: Exchange rates 5 Causes of changes in the Supply of a currency 5 When will a curve shift left? 7 Consequences of a currency appreciation/depreciation. 8 Consequences of a currency appreciation (8) - Evaluate 8 Consequences of a currency depreciation (8) - Evaluate 8 System #2 - Fixed Exchange Rate Systems 11 Changes in the exchange rate in a fixed exchange rate system 12 Evaluation of fixed vs freely floating exchange rate systems 13 Advantages of fixed er systems 13 Disadvantages of fixing the exchange rate 14 Over valued currency 14 Undervalued currency 15 Evaluation of a freely floating exchange rate system 16 System #3 - Managed ER System 17 Balance of Payments 19 Terminology 19 Credit 19 Debit 19 Structure of the Balance of Payments 20 Current Account 20 2. Capital Account 21 3. Financial Account 21 4. Net Errors and omissions 22 Relationship between the accounts in BoP 23 Explain how a current account imbalance might affect the exchange rate. 24 Current Account Deficit 24 What if the Central bank wants to prevent the currency from depreciating? 25 Current account surplus 26 Excess demand for the currency 26 Excess Supply of the currency