AQA GCSE · Economics 8136

Exchange rates: Practice Questions

5 multiple-choice questions marked as you go, and 1 written questions with worked solutions. All on Exchange rates.

6 questions9 marksFree, no account
Question 1
1 mark

If the value of the Pound Sterling (\(\pounds\)) changes from \(\pounds 1 = \$1.20\) to \(\pounds 1 = \$1.35\), what is the most likely effect on the UK economy?

Question 2
1 mark

If the exchange rate for the Pound Sterling moves from \(\pounds 1 = \$1.20\) to \(\pounds 1 = \$1.10\), what is the most likely impact on the UK's Balance of Payments on the current account, assuming demand for exports and imports is price elastic?

Question 3
1 mark

Suppose the demand for British goods in China increases significantly. Using the concept of demand and supply, what is the most likely long-term effect on the value of the Pound Sterling (#) against the Chinese Yuan (%)?

Question 4
1 mark

An economy experiences a significant depreciation of its currency. Which of the following sets of outcomes is most likely to occur, assuming the Marshall-Lerner condition is met (demand is price elastic)?

Question 5
1 mark

Consider the market for the British Pound (#). If there is a significant increase in the demand for UK-made luxury cars from consumers in the United States, what is the most likely effect on the exchange rate of the Pound against the US Dollar ($)?

Question 6
4 marks

Using the concepts of supply and demand, explain how an increase in the demand for a country's exports is likely to affect its exchange rate.

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