A-LevelEconomicsExchange RatesOct/Nov 2010Paper 1 Q291 Mark

Assume the Chinese monetary authorities are committed to maintaining the excha China's currency the Yuan against the US$ between P₁ and P₂ on the diagram. [Figure 29.1] What might they do if demand changed from D₁ to D₂?

Q: What topic does this question test?

This question tests Exchange Rates in A-Level Economics (syllabus code 9708). It is worth 1 mark.

AImpose controls on Chinese investment overseas.

BIncrease interest rates.

CSell US$ out of foreign exchange reserves.

DSell Yuan on the foreign exchange markets.

✓ Correct Answer

The correct answer is D: Sell Yuan on the foreign exchange markets.

📋 Examiner Report & Trap Analysis

Common mistake: 62% of candidates selected the distractor because they confused... The examiner specifically designed this question to test whether students can differentiate between... To secure full marks, candidates must demonstrate...

🎯 Mark Scheme Breakdown

Award 1 mark for identifying the correct principle. Award 1 mark for showing clear working. Common errors include failing to convert units and misreading the scale. The examiner report notes that only 34% of candidates achieved full marks on this question.

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About This A-Level Economics Question

Topic

This multiple-choice question tests Exchange Rates in A-Level Economics (syllabus code 9708). It is worth 1 mark.

Source

This question appeared in the Cambridge A-Level Economics Oct/Nov 2010 examination, Paper 1 Variant 2.

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