A-LevelEconomicsInternational economic issues9708/12 · Oct/Nov 2016 · Q241 Mark

In the diagram, curves D₁D₁ and SS relate to the demand for and supply of £ sterling in the foreign exchange market. What may cause the demand curve to shift from D₁D₁ to D2D2?

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Aan increase in the price of US goods sold in the UK

Ban increase in UK interest rates

Cthe development of US substitutes for UK goods

Dthe removal of UK tariffs against US goods

✓ Correct answer

C: the development of US substitutes for UK goods

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Topic: International economic issues, A-Level Economics (syllabus 9708). Multiple choice, 1 mark.
Source: A-Level Economics, Oct/Nov 2016 Paper 1 Variant 2, question 24.

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