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Exchange rates

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Question 5

In response to rising global inflation, Central Banks in eight closely integrated trading nations increase interest rates by an average of 2.0%. What is the most likely impact on one of these economies where its Central Bank decides to increase interest rates by only 0.5%?

A

Hot money will flow in, causing the exchange rate to appreciate

B

Hot money will flow in, causing the exchange rate to depreciate

C

Hot money will flow out, causing the exchange rate to appreciate

D

Hot money will flow out, causing the exchange rate to depreciate

Markscheme

Exchange rates Questions

  1. A Level
  2. /Economics
  3. /Exchange rates

30 exam-style questions on OCR A Level Economics Exchange rates. Each one has a worked solution and a mark scheme showing where the marks go.

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