Exchange rates and Business — OpenTuition Forums

LLilit11y ago

Dear F9 tutor, Kindly ask You, to explain with numerical examples this relationship. I have tried to remeber it, but I think I will be confused during exam, if I do not understand the logic. A lower exchange rate A higher exchange rate -Domestic goods are cheaper in - Domestic goods are more expensive in foreign markets so demand for foreign markets so demand for exports falls. exports increases. -Foreign goods are cheaper so demand for -Foreign goods are more expensive so imports rises. demand for imports falls. Thank you in advance. Best regards. Lilit.

John MoffatTutor11y ago#1

I don't see how I can give you numerical examples (and you would not be asked for any).

LLilit11y ago#2

OK, Sir, I will try to understand the logic.

John MoffatTutor11y ago#3

I would not spend too much time on it - there is unlikely to be much (if anything) on this in the exam.

LLilit11y ago#4

Thanks once again, Sir.

John MoffatTutor11y ago#5

You are welcome :-)

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