Soma L.

asked • 04/24/21

AP Macro Question Pls Help!

In a paragraph, explain what the balance of payments is and how current account surpluses and deficits work and how they impact the balance of payments. Give an example illustrating a scenario where the current account balance would increase and an example of where it would decrease. 

In a second paragraph, explain what exchange rates are and how they operate. Explain how appreciation and depreciation impact exchange rates and the current accounts. Give an example of how exchange rates impact trade, tourism and travel. You should have 3 well thought out examples. 

In a third paragraph, explain how foreign exchange markets work and how exchange rates impact the market. Give an example of how exchange rates impact the supply and demand of currency. 

Draw a correctly labeled graph illustrating one of your examples from the second paragraph and add an explanation that details how you drew the graph and what you included in it.

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