Question 1
In an exchange rate system without government intervention, a rise in the exchange rate is known as
Answer: A.
What this practice covers
Real past-paper questions, the answer key from the mark scheme, and the explanation that goes with it. Each one is marked the moment you pick, the correct option is shown whether or not you found it, and the full explanation opens either way. No account needed to answer them.
These questions are drawn from past Edexcel IGCSE papers. 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.
Keep going multiple-choice questions →
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 market movement; that is depreciation.
- Getting SPICED backwards.
- Saying a depreciation is simply good, ignoring imported inflation.
- Forgetting that a depreciation raises the cost of imported raw materials for domestic firms, not just finished goods.
- Confusing demand for and supply of the currency. Remember that imports supply the domestic currency.
- Assuming the current account must improve, without asking whether buyers actually change their behaviour.
Revise it first
If any of the above is unfamiliar, work through the notes before practising: Exchange Rates revision notes.