Skip to content
Marlbridge

AP® Macroeconomics · Unit 6 · Topic 6.5

Changes in the Foreign Exchange Market and Net Exports: Topic Checklist (Macroeconomics 6.5)

Specific “I can…” statements for how currency changes affect net exports and aggregate demand, each linked to the guide section and practice question that tests it.

Work through the list without notes. If you cannot do a statement, follow its link, then come back. Guide = study guide; Practice = practice questions.

Understanding

  • I can explain why a change in the exchange rate changes what foreign buyers pay, even when producers keep their own prices. (Guide: “Why the exchange rate matters for trade”; Practice Q2)
  • I can explain why an appreciation lowers exports, raises imports and lowers net exports. (Guide: “How an appreciation changes trade”; Practice Q1, Q7(a))
  • I can explain why a depreciation raises exports, lowers imports and raises net exports. (Guide: Worked example 2; Practice Q6(b))
  • I can explain that one currency’s appreciation is the other currency’s depreciation, so the two countries’ net exports move in opposite directions. (Guide: “Common misconceptions”; Practice Q4, Q6(e))

Calculation

  • I can convert a price from one currency into another, before and after a change in the exchange rate. (Guide: Worked example 1; Practice Q2, Q5(b))
  • I can calculate the percentage change in the value of each currency and explain why the two figures differ. (Guide: Worked example 2 “Check”; Practice Q5(a))
  • I can calculate net exports and use the spending multiplier to find the shift in AD from a change in NX. (Guide: Worked examples 1 and 2; Practice Q5(c), Q7(b))

Reasoning and graphs

  • I can draw the foreign exchange market for a currency and show the shift that causes it to appreciate or depreciate. (Guide: Figure 1; Practice Q6(a))
  • I can carry the chain from a currency change through net exports to a shift of AD on a correctly labelled AD–AS graph. (Guide: “From net exports to aggregate demand”; Practice Q6(c))
  • I can state the short-run effects on real output, unemployment and the price level. (Practice Q3, Q6(d))
  • I can explain why a currency change shifts AD rather than moving the economy along it. (Guide: “Common misconceptions”; Practice Q7(c))

All ticked? Move on to the Topic 6.6 study guide, Real Interest Rates and International Capital Flows, or return to the course roadmap.

AP® and Advanced Placement® are trademarks registered by the College Board, which is not affiliated with, and does not endorse, this website. Marlbridge is an independent tuition provider. It is not an authorized AP course provider, an AP school or an exam centre, and these resources are not official College Board materials. Reading them or doing simulations does not meet the laboratory requirement of an AP science course.