A-LevelEconomicsInternational Trade and FinanceMay/June 2019Paper 1 Q271 Mark

Under a system of floating exchange rates, what determines the foreign exchange value of a currency?

Q: What topic does this question test?

This question tests International Trade and Finance in A-Level Economics (syllabus code 9708). It is worth 1 mark.

Athe overall supply of and demand for a currency on currency markets

Bthe purchasing power of the currency relative to the purchasing power of foreign currencies

Cthe surplus or deficit on the balance of payments on current account

Dthe differential between domestic and foreign interest rates

✓ Correct Answer

The correct answer is A: the overall supply of and demand for a currency on currency markets

📋 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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About This A-Level Economics Question

Topic

This multiple-choice question tests International Trade and Finance in A-Level Economics (syllabus code 9708). It is worth 1 mark.

Source

This question appeared in the Cambridge A-Level Economics May/June 2019 examination, Paper 1 Variant 2.

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