International economics

Table of Contents

1. Topic pack - International economics - introduction
2. Section 3.1 International trade (notes)
3. Section 3.1 International trade (questions)
4. Section 3.1 International trade - simulations and activities
5. Section 3.2 Exchange rates (notes)
6. Section 3.2 Exchange rates - questions
7. Section 3.2 Exchange rates - simulations and activities
8. Section 3.3 Balance of payments - notes
   1. BOPs - introduction
   2. Credits and debits
   3. Current account
   4. Capital account
   5. Financial account
   6. Relationship between accounts
   7. Balance of payments - calculation
   8. Current account & floating exchange rate
   9. Current account & fixed exchange rate
   10. Balance of payments problems
   11. Consequences of deficit / surplus
   12. Policies to correct a balance of payments disequilibrium
   13. Consequences of a financial account deficit / surplus
   14. Marshall-Lerner condition
9. Section 3.3 Balance of payments - questions
10. Section 3.4 Economic integration - notes
11. Section 3.4 Economic integration - questions
12. Section 3.5 Terms of trade - notes
13. Section 3.5 Terms of trade - questions
14. Print View

Current account & floating exchange rate

Syllabus: Explain why a deficit in the current account of the balance of payments may result in downward pressure on the exchange rate of the currency.

Syllabus: Explain why a surplus in the current account of the balance of payments may result in upward pressure on the exchange rate of the currency.

Under a floating exchange rate, a current account surplus or deficit will put upward/downward pressure on the exchange rate. Click on the various markers in the diagrams below to see more detail for a current account surplus and deficit.

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• Floating exchange rate - current account surplus

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• Floating exchange rate - current account deficit