Module code: ECO3048

Module Overview

The module incorporates the foreign exchange market into a macroeconomic setting in order to shed light on the constraints within which open economies operate. At the heart of the analysis is the exchange rate and its determinants, including the different types of possible government intervention. In this context, the role of inflation, interest rates and market expectations are discussed. In addition, the government may also intervene in the foreign exchange market to manage the exchange rate by, e.g., buying or selling the international reserve currency. The decision whether to undertake or not such operations impacts on how the economy responds to different types of shocks (internal or external). The module covers these issues in detail and, in addition, provides a historical context for international arrangements concerning the exchange rate, as well as a review of episodes of exchange rate crises

Module provider


Module Leader

ARSENIS Panagiotis (Economics)

Number of Credits: 15

ECTS Credits: 7.5

Framework: FHEQ Level 6

JACs code: L130

Module cap (Maximum number of students): N/A

Module Availability

Semester 2

Prerequisites / Co-requisites


Module content

Indicative content includes:

  • Balance of payments

  • Foreign exchange market

  • Purchasing power parity (PPP)

  • Covered interest parity (CIP) and uncovered interest parity (UIP)

  • Asset market model, monetary model and exchange rate overshooting

  • Government policies in the foreign exchange market

  • International monetary arrangements

  • Financial crises

  • Macroeconomic policies for open economies

  • International macroeconomic policy trilemma

Assessment pattern

Assessment type Unit of assessment Weighting

Alternative Assessment

Not applicable

Assessment Strategy

The assessment strategy is designed to provide students with the opportunity to demonstrate that they have achieved the module’s learning outcomes.

Thus, the summative assessment for this module consists of:

  • Coursework (30% of the final module mark) and examination (70% of the final module mark).

  • The coursework test has a duration of 60 minutes and is a mix of multiple choice and open-ended questions. It is typically held in week 5.

  • The final two-hour examination consists of three multi-part questions, which are all compulsory. It is designed to reflect the learning outcomes and enables students to display both problem-solving skills and the ability to analyse, explain and evaluate different aspects of the material.

Formative assessment and feedback

Students are supported in their preparation for the summative assessments and receive various forms of feedback. On the former, they are provided with past coursework and examination papers along with the respective solutions (coursework only). On the latter, feedback is made available through SurreyLearn once coursework marks are released, normally within a week. This includes comments on student performance and advice on how to improve, where appropriate. Finally, students are invited to visit the lecturer during office hours and discuss their learning on a one-to-one basis.

Module aims

  • Provide the students with the factual, conceptual and procedural knowledge necessary to facilitate a deep understanding of the role of exchange rates in modern economies.

Learning outcomes

Attributes Developed
001 Understand the workings of the foreign exchange market and the role of government policies in it KC
002 Analyse models of exchange rate determination at different time horizons KC
003 Explain the factors potentially causing financial crises and/or historical changes in the international monetary system KC
004 Evaluate alternative exchange rate arrangements based on specific criteria KC
005 Solve problems under time constraint KCT

Attributes Developed

C - Cognitive/analytical

K - Subject knowledge

T - Transferable skills

P - Professional/Practical skills

Overall student workload

Independent Study Hours: 130

Lecture Hours: 20

Methods of Teaching / Learning

The learning and teaching strategy is designed to satisfy the module’s learning outcomes.

The learning and teaching methods include:

  • 2-hour lecture per week (10 lectures)

  • Lecturer-student interaction through the University’s VLE (SurreyLearn)

  • Q&As facilitated by electronic voting (PollEverywhere)

Indicated Lecture Hours (which may also include seminars, tutorials, workshops and other contact time) are approximate and may include in-class tests where one or more of these are an assessment on the module. In-class tests are scheduled/organised separately to taught content and will be published on to student personal timetables, where they apply to taken modules, as soon as they are finalised by central administration. This will usually be after the initial publication of the teaching timetable for the relevant semester.

Reading list


Programmes this module appears in

Programme Semester Classification Qualifying conditions
Economics BSc (Hons) 2 Optional A weighted aggregate mark of 40% is required to pass the module
Business Economics BSc (Hons) 2 Optional A weighted aggregate mark of 40% is required to pass the module
Economics and Finance BSc (Hons) 2 Optional A weighted aggregate mark of 40% is required to pass the module
Politics and Economics BSc (Hons) 2 Optional A weighted aggregate mark of 40% is required to pass the module
Economics and Mathematics BSc (Hons) 2 Optional A weighted aggregate mark of 40% is required to pass the module
Financial Mathematics BSc (Hons) 2 Optional A weighted aggregate mark of 40% is required to pass the module

Please note that the information detailed within this record is accurate at the time of publishing and may be subject to change. This record contains information for the most up to date version of the programme / module for the 2021/2 academic year.