What this practice covers
These questions are drawn from past AP Economics papers and filtered to open economy: international trade and finance. You answer, you find out immediately whether you were right, and you get the reasoning for the correct option and for each distractor. Wrong answers go to a mistakes locker so you can come back to exactly those.
Practice is free. You need an account only so your progress and your mistakes are still there next time.
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What examiners see students get wrong here
These are the errors that cost marks on open economy: international trade and finance, taken from our own topic notes. Read them before you practise and you will recognise the traps in the questions.
- Not stating which currency's market the graph shows.
- Putting the wrong currency on the axes, or labelling the vertical axis "price" without units.
- Shifting demand when the correct answer is a shift in supply (or both).
- Using "devaluation" for a market-driven fall; that is depreciation.
- Forgetting that one currency's appreciation is another's depreciation.
- Placing FDI in the current account. Asset flows go in the financial account; the income they later generate goes in the current account.
- Using the nominal rather than the real interest rate to explain capital flows.
- Forgetting that only the relative interest rate matters.
Revise it first
If any of the above is unfamiliar, work through the notes before practising: Open Economy: International Trade and Finance revision notes.