IBEconomicsDPHLExam Questions4. The Global Economy4.5 Exchange Rates

Exchange Rates (DP IB Economics: HL)

Exam Questions

10 mins5 questions
12 marks

Case Study

Table 1

Text B, Paragraph 1

Since 2018, the Thai Baht has emerged as the top-performing currency in Asia's emerging markets. From 2020-2021, it has gained over 8 percent in value against the US dollar, recently reaching a six-year peak. However, various news headlines and commentaries suggest that the robust currency has negatively affected Thailand's international competitiveness and had a negative impact on two vital pillars of its economy: goods exports and tourism.


Using the data in Table 1 and information in Text B, Paragraph 1, calculate the amount of Thai Baht that $1 could purchase in 2021.

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22 marks

Case Study

Text D, Paragraph 1
China has had ongoing discussions with international trade partners about its use of a fixed exchange rate system. These discussions have focused on how this system affects trade relationships and global competition.

Define the term fixed exchange rate as indicated in bold (Text D, Paragraph 1).

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32 marks

Case Study

Text A, Paragraph 2
New Zealand’s economic policy discussions have centred on the possible benefits of using a floating exchange rate system. These discussions have touched on several key areas of the economy.

State two benefits of a floating exchange rate as found in (Text A, Paragraph 2).

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42 marks

Case Study

Text E, Paragraph 2
Egypt has recently shifted away from a fixed exchange rate system, sparking debates about the drawbacks of maintaining such a system under fluctuating global economic conditions.

State two disadvantages of fixed exchange rates as found in (Text E, Paragraph 2).

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52 marks

Case Study

Text E, Paragraph 3
Countries like the Philippines continue to receive large amounts of remittances from citizens working abroad. These transfers play a key role in supporting the country’s economy.

Define the term remittances as indicated in (Text E, Paragraph 3).

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