A-LevelEconomicsInternational economic issues9708/12 · Feb/Mar 2023 · Q231 Mark

Which change affecting the foreign exchange market for the US$ would be most likely to result in a shift to the right of the demand curve and a movement along the supply curve?

AThe US government reduces subsidies on exports to the EU.

BForeign currency speculators in Switzerland believe that the US$ is undervalued and act accordingly.

CThe US government intervenes in the foreign exchange market so as to bring about a drop in the value of the US$.

DUS pharmaceutical companies experience a fall in demand for their products from the rest of the world.

✓ Correct answer

B: Foreign currency speculators in Switzerland believe that the US$ is undervalued and act accordingly.

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Topic: International economic issues, A-Level Economics (syllabus 9708). Multiple choice, 1 mark.
Source: A-Level Economics, Feb/Mar 2023 Paper 1 Variant 2, question 23.

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