A-LevelEconomicsInternational economic issues9708/12 · Oct/Nov 2011 · Q291 Mark

Other things being equal, what will happen if a British company raises the sterling price of goods it sells to Pakistan by the full extent of a depreciation of sterling against the rupee?

AThe demand for the company's goods will fall in Pakistan.

BThe company's earnings in Pakistan will remain constant in pounds sterling.

CThe company's earnings in Pakistan will remain constant in Pakistan rupees.

DThe profit margin on sales to Pakistan will decline.

✓ Correct answer

C: The company's earnings in Pakistan will remain constant in Pakistan rupees.

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Topic: International economic issues, A-Level Economics (syllabus 9708). Multiple choice, 1 mark.
Source: A-Level Economics, Oct/Nov 2011 Paper 1 Variant 2, question 29.

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