A-LevelEconomicsInternational economic issues9708/12 · May/June 2011 · Q291 Mark

The diagram shows the exchange rate for the UK£ in terms of the US$. The original exchange rate is at E. What will be the new exchange rate equilibrium of the UK£ following a reduction in UK interest rates and a rise in US interest rates?

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.

AThe point A on the diagram.

BThe point B on the diagram.

CThe point C on the diagram.

DThe point D on the diagram.

✓ Correct answer

C: The point C on the diagram.

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

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