A-LevelEconomicsMacroeconomics: Exchange RatesMay/June 2012Paper 1 Q291 Mark
In the diagram D₁ and S₁ are the initial supply and demand curves of the pound sterling in foreign exchange markets. [Figure 29.1] What will cause the demand curve to shift to D₂ and the supply curve to S₂?
Adepreciation of the pound sterling
Bdecrease in UK interest rates
Can increase in the price levels of other countries
Dan increase in the level of UK import tariffs
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The correct answer is C. This question tests the candidate's understanding of macroeconomics: exchange rates within the Economicssyllabus. The examiner's mark scheme requires...
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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...
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