Day: April 15, 2019

An appreciation in the value of a country’s currency will lead to ………..?

Select ONE answer:

1. a rise in government spending
2. a rise in the rate of inflation
3. a fall in the rate of unemployment
4. a fall in the price of imports to that country

Show your workings to arrive at your answer, and explain and justify your reasons:……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Economics KS5 classes.

The answer is 4

1. If the government imports this will fall (ceteris paribus).
2. May reduce both demand pull and cost push inflationary pressures.
3. A rise in imports and falling exports will reduce domestic demand.
4. Correct: When a currency appreciates, imports become cheaper.

 

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