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
✓ Correct Answer
The correct answer is C: an increase in the price levels of other 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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