The Swedish krona (SEK) is a floating currency, which means the value of the Swedish krona should

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Question:

The Swedish krona (SEK) is a floating currency, which means the value of the Swedish krona should be decided by the market. The meaning of this is also that no Swedish or foreign authority should try to affect or decide the value of SEK. Define and explain central and basic concepts concerning a currency and the value of a currency. Also, discuss and explain the following statement. In your motivation use and refer to the Circular Flow of Income and Resources. Motivate your answers. “During the last year the SEK has been increasing in value. An increasing value of the SEK (everything else constant) is always and from all aspects something beneficial for the development of the Swedish Economy.”