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Cambridge IGCSE Economics practice

Paper 2 structured question: Foreign exchange rates

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Foreign exchange rates

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Paper 2Structured Questions1 marks

The exchange rate of the domestic currency has recently fluctuated significantly.

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Impact of Exchange Rate Fluctuations

The domestic currency has appreciated against foreign currencies, leading to changes in the prices of imports and exports.

  1. a

    State the effect of currency appreciation on import prices.

    Aim for approximately 1 distinct marking point.

    [1]

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Paper 2 structured question: Foreign exchange rates

Paper 2Structured Questions3 marks

Description

Effects of Currency Depreciation

As the currency depreciates, the prices of exports and imports are affected, influencing consumer behavior and trade balance.

  1. a

    Explain how currency depreciation affects export prices and demand.

    Aim for approximately 3 distinct marking points.

    [3]