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Cambridge IGCSE Economics practice

Paper 2 structured question: Foreign exchange rates

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Attempt questionForeign exchange rates revisionRevise the key idea

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Foreign exchange rates

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Paper 2Structured Questions4 marks

The foreign exchange market is essential for international trade and investment.

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Impact of Economic Factors on Exchange Rates

Economic factors such as inflation rates, interest rates, and political stability play a crucial role in determining exchange rates in the foreign exchange market.

  1. a

    Discuss the impact of inflation on foreign exchange rates.

    Aim for approximately 4 distinct marking points.

    [4]

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Paper 2 structured question: Foreign exchange rates

Paper 2Structured Questions4 marks

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Foreign Exchange Market Dynamics

In the foreign exchange market, the value of currencies fluctuates based on the demand and supply. Factors such as interest rates, inflation, and political stability can significantly impact these dynamics.

  1. a

    Explain how demand and supply determine foreign exchange rates.

    Aim for approximately 4 distinct marking points.

    [4]