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Exchange rates

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Question 19

The diagram below shows a change in the exchange rate of a country's currency.

A supply and demand diagram showing a rightward shift of the currency supply curve from S1 to S2, which causes the exchange rate to fall from ER1 to ER2.

What is most likely to have caused the change illustrated in the diagram?

A rise in domestic interest rates relative to other countries

An increase in foreign demand for the country's exports

An increase in the domestic marginal propensity to import

A decrease in speculative selling of the currency

Exchange rates Questions

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