The Multiple Choice Questions Blog

A small UK baker buys flour from a French supplier. The flour costs 50 Euros per sack. The exchange rate is currently £1= 2.5 Euros. It then changes to £1 = 2 Euros.

Which of the following is MOST LIKELY results of this change in the exchange rate for the baker?

Select ONE answer:

1. The cost of buying the goods from the French supplier will fall
2. The cost of buying the goods from the French supplier will rise
3. The price of the flour increases in France
4. The business will gain more Euros for the same amount of pounds
5. There is no change to the price in Europe

In April 2016, £1 could be exchanged for $1.60 when travelling to America. In August 2016, this was down to $1.30. This is sad for tourists, but great for exporters like Rolls-Royce Aerospace, JCB, Bentley Motors – why?
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This is multiple choice question is suitable for Business Studies KS4 classes.

The answer is 2 – The cost of buying flour at €50 per sack at an exchange rate of 2.5 is £20. The cost of buying flour at €50 per sack at an exchange rate of 2 is £25, a cost increase to the UK baker of £5.

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A UK business sells shoes in Europe. Each pair is sold for £40. The exchange rate between the pound and Euro decreases from £1 = 2 Euros to £1 = 1 Euro.

Which of the following is MOST LIKELY to best describe the change in price of the shoes?

Select ONE answer:

1. The shoes are now cheaper in Europe
2. The price of the shoes decreases by half the original amount
3. The shoes become more expensive
4. The shoes still sell for £40 in the UK
5. There is no change to the price in Europe

When exchanging from a foreign currency to pounds the rule is……?
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This is multiple choice question is suitable for Business Studies KS4 classes.

The answer is 1 – The cost of selling a show worth £40 from the UK to Europe at an exchange rate of €2 will be €80. The cost of selling a show worth £40 from the UK to Europe now at an exchange rate of €1 will be €40, a cost decrease of €40.

This work is licensed under a Creative Commons Attribution 4.0 International License.

A UK business sells goods in Spain. The exchange rate between the pound and Euro increases from €1.5 to €2.

Which TWO of the following would be the MOST LIKELY results of this change in the exchange rate for a UK retailer?

Select TWO answers:

1. The price of the goods in Spain will increase
2. The price of the goods in Spain will decrease
3. The business will sell more abroad
4. The business will sell less abroad
5. The business will sell less in the UK

When exchanging from pounds to a foreign currency the rule is……?
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This is multiple choice question is suitable for Business Studies KS4 classes.

The answer is 1 & 4 – The cost of selling a good worth £20 from the UK to Spain at an exchange rate of €1.5 will be €30. The cost of selling a good worth £20 from the UK to Spain at an exchange rate of €2 will be €40, a cost increase of €10.

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A small UK high street retailer obtains materials from a foreign supplier in the EU. The cost of buying each product is 30 Euros. The retailer sells the goods in the UK for £35 each. The exchange rate is currently £1= 1.5 Euros. It then changes to £1 = 2 Euros.

Which TWO of the following would be the MOST LIKELY results of this change in the exchange rate for the UK retailer?

Select TWO answers:

1. There will be no change because the price in the UK will stay the same
2. The cost of buying the goods from the EU will rise
3. The cost of buying the goods from the EU will fall
4. The business will have to exchange more pounds to get the same amount of Euros
5. The business will have to exchange less pounds for the same amount of Euros

What is an exchange rate?
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This is multiple choice question is suitable for Business Studies KS4 classes.

The answer is 3 & 5 – The cost of buying €30 at an exchange rate of 1.5 is £20. The cost of buying €30 at an exchange rate of 2 is £15, a cost saving of £5.

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Identify TWO MOST LIKELY effects on small businesses of the changes in interest rates shown in the graph above?

Select TWO answers.

1. Increased consumer spending using credit cards
2. Lower costs for businesses who have an overdraft
3. Less consumer spending with small businesses
4. Higher variable costs for small businesses with variable rate overdrafts.
5. Higher fixed costs for small businesses with fixed bank loans

Why do savings theoretically fall when interest rates come down. Which types of savers are most impacted by falls in interest rates?
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This is multiple choice question is suitable for Business Studies KS4 classes.

The answer is 3 & 4 – Sales are likely to fall as consumers reduce their spending as interest rates rise, and those with large debts or mortgages have less disposable income to spend, and higher variable costs from those on variable interest rate overdraft arrangements.

This work is licensed under a Creative Commons Attribution 4.0 International License.