Economics Multiple Choice Question – 21 April 2019

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

Economics

The diagram below shows three supply curves (labelled S) and three demand curves (labelled D) for the pound sterling (£). The price of sterling is quoted in US$. The original equilibrium is at point X.

There is now a recession in the USA. At the same time, the UK is experiencing a consumer boom.

Which point A, B, C or D will represent the new equilibrium in the market for the pound sterling?

Diagram 17

Select ONE answer:

  1. A
  2. B
  3. C
  4. D

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 2

  1. This shows a decrease in supply and a decrease in demand for pounds sterling.
  2. Correct: A recession in the USA will reduce demand for UK exports and so the demand for pounds sterling. A consumer boom will increase demand for US imports and to purchase these the supply of pounds sterling will increase.
  3. This shows a decrease in supply and an increase in demand for pounds sterling.
  4. This shows an increase in supply but also an increase in demand for pounds sterling.

 

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Author: stuart001uk2014

Referral marketing, business, economics and accounting s​pecialist & corporate mentor

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