Class 12 Macro Economics: Foreign Exchange Rate
Chapter 11: Foreign Exchange Rate — understand the meaning of foreign exchange, fixed, flexible and managed floating rate systems, how exchange rates are determined, and the functions of the foreign exchange market. CBSE Class 12 Macroeconomics notes covering 4 topics: Foreign Exchange and Exchange Rate, Types of Exchange Rate Systems, Determination and Changes in Exchange Rate, and Foreign Exchange Market.
Topics(5)
Understanding Foreign Exchange and Exchange Rate
Foreign exchange meaning, exchange rate as the price of one currency in terms of another, and currency depreciation and appreciation with effects on exports, imports, and national income. CBSE Class 12 Macroeconomics notes.
Demand and Supply of Foreign Exchange
Six sources of demand and supply of foreign exchange, demand and supply curves and their slopes, and reasons for shifts in demand and supply. CBSE Class 12 Macroeconomics notes.
Types of Exchange Rate Systems
Fixed exchange rate system with merits and demerits, devaluation vs depreciation, flexible exchange rate system, and managed floating rate system with RBI intervention. CBSE Class 12 Macroeconomics notes.
Determination and Changes in Exchange Rate
Equilibrium exchange rate from demand-supply intersection, excess demand and supply adjustment mechanisms, and how shifts in demand and supply curves alter equilibrium. CBSE Class 12 Macroeconomics notes.
Foreign Exchange Market
Definition and functions of the foreign exchange market (transfer, credit, hedging), spot vs forward markets, other exchange rate systems (adjustable peg, wider band, crawling peg), and effective exchange rates NEER and REER. CBSE Class 12 Macroeconomics notes.