Read currency pairs, calculate conversions, and explain intervention.
Practice activities
Read, invert, convert
Quote: 0.80 EUR per USD. Amount: 100. Ignore fees; round to two decimal places.
Which curve? Which direction?
The market trades USD. The vertical axis is EUR per 1 USD; a higher rate means USD appreciation against EUR.
Follow who buys or sells USD before revealing the graph.
Match the macro consequences
USD appreciates against EUR. Assume unchanged invoice prices and other conditions unless stated.
Central-bank intervention challenge
A hypothetical bank targets 1.00 EUR per USD. A fall in private USD demand puts the rate at 0.90. Which reserve transaction can defend the unchanged parity?
DemandSupplyOriginal curves
Before intervention: private USD demand has fallen from the dashed original curve.
Explain, apply, evaluate
Draft your answer on paper before opening a plan. Use the checklist to review your answer. These are study prompts, not official IB markschemes.
Explain how a central bank could defend a fixed exchange rate during capital flight.
Reveal a possible response plan
State the currency and quote units.
Draw higher domestic currency demand from reserve-financed purchases.
Explain reserve depletion and interest-rate trade-offs.
Evaluate credibility, capital controls and whether the peg is sustainable.
Test yourself
Test yourself
18 fixed questions
Draw up to 10 questions without repeats. Questions and answer order change on each attempt.
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