What this practice covers
These questions are drawn from past CIE 9708 papers and filtered to exchange rates. 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.
Start practising Paper 1 MCQs →
What examiners see students get wrong here
These are the errors that cost marks on exchange rates, taken from our own topic notes. Read them before you practise and you will recognise the traps in the questions.
- Using devaluation for a floating rate. Use depreciation.
- Failing to specify the quotation. State dollars per pound, euros per dollar or another clear price.
- Treating an appreciation as good and depreciation as bad. Both create benefits and costs.
- Ignoring the SRAS channel. Imported-input prices matter.
- Assuming exports and imports respond immediately and fully. Use elasticity, contracts and time.
- Confusing demand for exports with demand for currency. Export purchases usually generate currency demand, but explain the link.
- Confusing a movement along a curve with a shift. The currency’s own price causes movement along; another determinant shifts the curve.
- Claiming AD and SRAS imply a certain output result when they shift in opposite directions. State ambiguity and conditions.
Revise it first
If any of the above is unfamiliar, work through the notes before practising: Exchange Rates revision notes.