A-LevelEconomicsMacroeconomics: Exchange Rates and Balance of PaymentsMay/June 2012Paper 1 Q261 Mark
A country has a fixed exchange rate. What is likely to result in an improvement in its balance of payments?
Adecrease in interest rates in foreign countries
Bdecrease in the country's interest rates
Cdecrease in the income of foreign countries
Dan increase in the country's national income
✓ Correct Answer
The correct answer is A: decrease in interest rates in foreign countries
📋 Examiner Report & Trap Analysis
Common mistake: 62% of candidates selected the distractor because they confused... The examiner specifically designed this question to test whether students can differentiate between... To secure full marks, candidates must demonstrate...
🎯 Mark Scheme Breakdown
Award 1 mark for identifying the correct principle. Award 1 mark for showing clear working. Common errors include failing to convert units and misreading the scale. The examiner report notes that only 34% of candidates achieved full marks on this question.
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