A-LevelEconomicsInternational economic issues9708/12 · Oct/Nov 2017 · Q221 Mark

Assume the Chinese monetary authorities are committed to maintaining the exchange rate of China's currency, the Yuan, against the US$ between P₁ and P2 on the diagram. [Figure showing supply curves S1 and S2, demand curve D, and price levels P1 and P2] What might they do if supply changed from S₁ to S2?

This question uses a diagram from the original paper, which isn't shown here. Open the full paper from the past papers archive to see it.

Aintroduce controls on Chinese investment overseas

Blower interest rates

Cremove tariffs on imports from USA

Dsell Yuan on the foreign exchange markets

✓ Correct answer

A: introduce controls on Chinese investment overseas

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Topic: International economic issues, A-Level Economics (syllabus 9708). Multiple choice, 1 mark.
Source: A-Level Economics, Oct/Nov 2017 Paper 1 Variant 2, question 22.

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