Exchange Rate

The table gives the price of a paperback book as printed on its back cover.

What is needed to make a clear comparison of the price in the four countries?

• consumer price indices

• exchange rates

• indirect tax rates

• inflation rates

What would contribute to a fall in the value of the UK pound (£)?

• a fall in interest rates in other countries

• a rise in the number of foreign tourists visiting the UK

• the removal of import tariffs by the USA

• the value of UK imports increasing more than the value of UK exports

What is meant by the depreciation of a currency?

• a fall in its external value

• a fall in its internal value

• a rise in its external value

• a rise in its internal value

Two industries in Namibia are fishing and tourism. The value of the currency of Namibia fell in

2001.

If there were no other changes, what resulted from the fall?

• Imported goods in Namibian shops became cheaper.

• The price of Namibia’s fish sold in foreign markets became cheaper.

• The volume of Namibia’s exports decreased.

• Tourists were discouraged by higher prices in Namibia.

What is not a main economic government objective?

• a balance of payments deficit

• economic growth

• full employment

• price stability

There was an increase in the value of the United States (US) dollar against the South African

Rand.

What is a result of this?

• an increase in the number of exports from the US to South Africa

• an increase in the number of imports to the US from South Africa

• fewer people from the US spend holidays in South Africa

• more people from South Africa spend holidays in the US

Which factor would cause a country’s exchange rate to fall?

• demand for imports increase

• domestic interest rates rise

• domestic savings increase

• more tourists visit the country

What is likely to cause a rise in a country’s foreign exchange rate?

• a fall in its exports of goods and services

• a fall in its imports of goods and services

• a fall in its inflow of income

• a rise in its outflow of transfers

The Mexican currency (the peso) has fallen in value against the US dollar.

What will be the effect of this on the Mexican economy?

• a decrease in tariffs on imports

• a decrease in the price of exports

• a decrease in the price of imports

• a decrease in the volume of exports

The UK pound depreciates against the US dollar from £1 = $1.80 to £1 = $1.50.

What does this mean?

• UK imports from the US will cost less.

• US imports from the UK will cost more.

• UK pounds will be dearer in terms of US dollars.

• US dollars will be dearer in terms of UK pounds.