Currency Appreciation & Depreciation: Effects of Exchange Rate Changes

Instructions:

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question 1 of 3

What would you expect if there is an increase in exchange rate?

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1. An increase in the value of a domestic currency will mainly affect _____.

2.

Consider a scenario where there has been a decrease in the exchange rate of the American dollar.

How will the inflation and import prices vary?

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About This Quiz & Worksheet

After going over this quiz and worksheet combo, you will have improved your understanding of topics such as what effects increases and decreases of the exchange rate have.

Quiz & Worksheet Goals

Be sure to study up on how the following factors affect appreciation and depreciation:

  • The exchange rate
  • Employment
  • Purchasing power
  • International trade

Skills Practiced

Practice these skills using this quiz and worksheet:

  • Information recall - access the knowledge you've gained regarding the exchange rate of currency
  • Reading comprehension - ensure that you draw the most important information about differences in purchasing power from the related currency appreciation and depreciation lesson
  • Making connections - use your understanding of what a weak currency can be good for

Additional Learning

The lesson titled Currency Appreciation & Depreciation: Effects of Exchange Rate Changes is a great resource of information. The information in this lesson will ensure you will be able to:

  • Explain the relationship between demand, trade, the exchange rate, and employment
  • Identify the differences between appreciation and depreciation
  • Discuss why a foreign country would be more or less likely to export to the U.S. given the strength of America's currency
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