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

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

Overall student workload

Independent Learning Hours: 96

Lecture Hours: 22

Tutorial Hours: 5

Guided Learning: 5

Captured Content: 22

Module Availability

Semester 2

Prerequisites / Co-requisites


Module content

Indicatively, the module's content includes:

  • Balance of payments

  • Foreign exchange market

  • International financial investments

  • Determination of exchange rates

  • Government policies towards the foreign exchange market

  • Financial crises

  • The Mundell-Fleming model (IS-LM-FE)

Assessment pattern

Assessment type Unit of assessment Weighting
School-timetabled exam/test MIDTERM TEST (1 HR) 30
Examination FINAL EXAMINATION (120 MIN) 70

Alternative Assessment


Assessment Strategy

The assessment strategy is designed to provide students with the opportunity to demonstrate that they have understood the mechanics of the foreign exchange market and how economic shocks affect exchange rates and a country’s macroeconomic performance.

Thus, the summative assessment for this module consists of:

  • A midterm test.

  • A final exam.

Both assessments are designed to advance students’ resourcefulness and resilience. Students are required to use their problem-solving skills as they encounter original exercises primarily based on the module’s analytical macroeconomic framework.

Formative assessment and feedback

Students are given practice material with answers in preparation for their assessments (midterm test and final exam). Also, students take online quizzes during lectures and feedback is provided along with answers. In addition, mock papers are provided to help students familiarise with the assessments’ formats and contents. Finally, the midterm test’s answers are published to help students identify their  mistakes and better prepare for the final exam.

Module aims

  • Provide the students with the factual, conceptual and procedural knowledge necessary to facilitate a deep understanding of foreign exchange markets and the role of exchange rates in modern economies. The module builds on the macroeconomics foundations taught earlier in the School's programmes, and provides essential knowledge to students who aspire to work in finance.
  • The module's macroeconomic and historical context enhance students' global and cultural capabilities and its analytical framework allows the development of resourcefulness and resilience.

Learning outcomes

Attributes Developed
001 Students will be able to understand the mechanics of the foreign exchange market and the role of government policies in it. KCT
002 Students will be able to apply models of exchange-rate determination to analyse changes in exchange rates at different time horizons. KCPT
003 Students will be able to explain the factors that may lead to financial crises and the historical changes in the international monetary system. KCPT
004 Students will be able to use diagrammatic analysis to explain how government policies or other economic shocks may affect a country's macroeconomic performance. KCP

Attributes Developed

C - Cognitive/analytical

K - Subject knowledge

T - Transferable skills

P - Professional/Practical skills

Methods of Teaching / Learning

The learning and teaching strategy is designed to provide an understanding of how the foreign exchange market works, and how governments policies interact with it to affect a country’s macroeconomic performance.

The learning and teaching methods include:

  • Lectures

  • Tutorials

  • Quizzes facilitated by electronic voting

The lectures introduce the topics in a concise way, elaborating on key concepts and models. The tutorials enable students to practice answering questions and solving problems based on the lecture material. The quizzes offer students opportunities to revisit challenging concepts and test their understanding.

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
Upon accessing the reading list, please search for the module using the module code: ECO3048

Other information

The School of Economics is committed to developing graduates with strengths in Employability, Digital Capabilities, Global and Cultural Capabilities, Sustainability and Resourcefulness and Resilience. This module is designed to allow students to develop knowledge, skills, and capabilities in the following areas:

Resourcefulness and resilience. Students are asked to answer questions or solve problems on a regular basis, e.g., during lectures or when working on the practice material they are given during the term.

Global and cultural capabilities. Part of the module’s syllabus is the discussion of case studies of financial crises from different countries, but also additional articles from media outlets that cover relevant developments around the world are provided during the term to associate the taught theory with real-life events.

Programmes this module appears in

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

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 2025/6 academic year.