Economics Multiple Choice Question – 9 August 2019

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

The exchange rate between the pound sterling and the US dollar is initially £1 = $1.5.

A UK firm sells a product in the USA for $300.

The exchange rate changes to £1 = $1.2 and the firm keeps the dollar price unchanged.

What will be the price of the product in pounds?

Select ONE answer:

  1. £200
  2. £250
  3. £300
  4. £360

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 is the initial price i.e. $300/1.5.
  2. Correct: $300/1.2.
  3. This would be the case if the exchange rate changed to £1 = $1.
  4. This is $300 x 1.2.

 

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