The pound depreciates by 8%. A UK manufacturer exports half its output but imports most of its components. Which assessment is best?
Profit must rise because exports become cheaper abroad
Profit must fall because imported components cost more
The effect on profit depends on changes in export demand and the size of the increase in imported input costs
There is no effect unless the firm changes its sterling price
21 exam-style questions on OCR GCSE Economics 4.3 Exchange rates, covering 4.3.1 Draw how exchange rates are determined, 4.3.2 Analyse how exchange rates are determined, 4.3.3 Calculate currency conversion, 4.3.4 Analyse exchange rate data, and 4.3.5 Effect of exchange rate changes. Each one has a worked solution and a mark scheme showing where the marks go.