Foreign exchange rates — Paper 1 · IGCSE Economics (9-1) 0987

28 There has been an appreciation of the value of a country’s currency against other currencies. What effects will this have on prices of imports of raw materials and prices of exports of manufactured goods? prices of imports of prices of exports of raw materials manufactured goods A cheaper cheaper B cheaper more expensive C more expensive cheaper D more expensive more expensive

1 marks

Answer: B

This question in 0987/12 May/June 2020

29 A US car dealer agrees an import price of US$25 000 for a Japanese car at the current rate of exchange. The US dollar then strengthens by 10% against the Japanese yen. What will be the new import price paid for the Japanese car? A US$20 000 B US$22 500 C US$25 000 D US$27 500

1 marks

Answer: B

This question in 0987/11 May/June 2021

29 What may result from a balance of payments trade surplus? A The exchange rate appreciates and causes export prices to fall. B The exchange rate appreciates and causes export prices to rise. C The exchange rate depreciates and causes export prices to fall. D The exchange rate depreciates and causes export prices to rise.

1 marks

Answer: B

This question in 0987/12 May/June 2021

30 What is an immediate effect for a country of a fall in its foreign exchange rate? A a fall in the money supply B an increase in purchasing power C cheaper imports D more competitive exports

1 marks

Answer: D

This question in 0987/12 Oct/Nov 2021

27 What is the definition of foreign exchange rate? A the difference between emigration and immigration B the difference between the values of imports and exports C the price of one currency in terms of another D the price of one good in terms of another

1 marks

Answer: C

This question in 0987/11 May/June 2022

27 The price of a currency in a fixed exchange rate system is reduced. What is this called? A appreciation B depreciation C devaluation D revaluation

1 marks

Answer: C

This question in 0987/12 May/June 2022

29 What is most likely to result from a reduction in the value of a country’s currency if there are no other changes in the economy? A A trade in goods surplus will fall. B Export prices will rise. C Import prices will rise. D The inflation rate will fall.

1 marks

Answer: C

This question in 0987/12 May/June 2022

29 An Argentine product initially sells in the US for $50 when the exchange rate between the two countries is 5 pesos to 1 dollar. The exchange rate changes to 10 pesos to 1 dollar and the price of the product remains unchanged in Argentina. What will be the new price of the product in the US? A $5 B $25 C $100 D $500

1 marks

Answer: B

This question in 0987/11 May/June 2023

29 What would increase the demand for a country’s currency on the foreign exchange market? A a decrease in its inward investment B a decrease in its rate of interest C an increase in its exports D an increase in its imports

1 marks

Answer: C

This question in 0987/12 May/June 2023

18 Why would devaluing the international value of an economy’s currency help reduce unemployment? A Devaluing the currency would increase the cost of production. B Devaluing the currency would increase the confidence of investors. C Devaluing the currency would increase the foreign demand for domestic products. D Devaluing the currency would increase the demand for imports.

1 marks

Answer: C

This question in 0987/12 Oct/Nov 2023

29 Which factor would cause a country’s exchange rate to fall? A Demand for imports increases. B Domestic interest rates rise. C Domestic savings increase. D More tourists visit the country.

1 marks

Answer: A

This question in 0987/12 Oct/Nov 2023

28 The diagram shows the market for the Chinese yuan (¥) priced in US dollars ($). S1 price of ¥ (in terms of $) D1 D2 O quantity of ¥ What could have caused the change in demand for the yuan from D1 to D2? A a decrease in foreign direct investment in China B a decrease in the level of tariffs levied by China on imports C an increase in the buying of yuan by central banks D an increase in the Chinese rate of interest

1 marks

Answer: A

This question in 0987/12 May/June 2024

29 The table shows the average exchange rate of the UK pound (£) to the US dollar ($), that is the amount of $ that can be bought with £1. exchange rate year UK£ / US$ 1 1.64 2 1.52 3 1.35 4 1.25 What is a likely effect of this change on the UK economy? A decreased cost-push inflation B decreased current account deficit C increased quantity of imports D increased trade deficit

1 marks

Answer: B

This question in 0987/12 May/June 2024

29 To what does this statement refer? A an alternative method of trade protection B the determination of the exchange rate in a fixed exchange rate system C the determination of the exchange rate in a floating exchange rate system D the increasing globalisation of international trade

1 marks

Answer: C

This question in 0987/12 Oct/Nov 2024

29 In the diagram, D is the demand curve for the Chinese yuan and S is the supply curve of the Chinese yuan. price of yuan (in US dollars) S P1 P D O X Y Z quantity The Chinese central bank wishes to set the price of the yuan at P1. Which action would it have to take? A buy XY yuan B buy XZ yuan C sell XY yuan D sell XZ yuan

1 marks

Answer: B

This question in 0987/11 May/June 2025

27 An Argentine product initially sells in the US for $50 when the exchange rate between the two countries is 5 pesos to 1 dollar ($). The exchange rate changes to 10 pesos to 1 dollar and the price of the product remains unchanged in Argentina. What will be the new price of the product in the US? A $5 B $25 C $100 D $500

1 marks

Answer: B

This question in 0987/12 May/June 2025

29 The table shows the retail price at which the same book can be bought in four countries. country price in local currency local currency Australia $14.99 Australian dollars Canada $11.99 Canadian dollars New Zealand $20.95 New Zealand dollars United Kingdom £6.99 GB pound What additional information is required to make a meaningful comparison of the price of the book between the countries? A direct tax rates B exchange rates C inflation rates D level of import tariffs

1 marks

Answer: B

This question in 0987/12 May/June 2025

29 Which combination of changes in export revenue and import expenditure is most likely to cause a country’s exchange rate to depreciate? export revenue import expenditure A decreases decreases B decreases increases C increases decreases D increases increases

1 marks

Answer: B

This question in 0987/12 Oct/Nov 2025