What students need to learn:
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Content
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Students should be able to:
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Additional Guidance Notes
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Balance of Payments
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Understand the different components of the Balance of Payments.
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For example: the trade in goods and services current account as well
as the accounts showing short- and long-term capital flows.
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Current account deficits and surpluses
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Understand the factors influencing the size of deficits and surpluses
on different components of the Balance of Payments; significance of deficits
and surpluses on the current account.
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Students should consider whether such current account surpluses and
deficits matter and examine measures to reduce such imbalances. The significance
of global imbalances should be examined.
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Influences on exchange rates
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Understand factors influencing exchange rates.
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Students should consider the significance of relative interest rates;
relative inflation rates; speculation.
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Changes in exchange rates
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Consider the impact of changes in exchange rates.
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For example the implications for competitiveness.
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Monetary union
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Understand benefits and costs of monetary unions.
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For example: the effects on the rate of inflation; unemployment; the
Balance of Payments and economic growth. Students could focus on the Eurozone. Specific knowledge of other monetary unions (single currencies) is
not required.
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