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Economics · May / June 2021 · Paper 12 · Question 29

2281Foreign exchange rates

What may result from a balance of payments trade surplus?

  1. AThe exchange rate appreciates and causes export prices to fall.
  2. BThe exchange rate appreciates and causes export prices to rise.
  3. CThe exchange rate depreciates and causes export prices to fall.
  4. DThe exchange rate depreciates and causes export prices to rise.

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Correct answer: B. The exchange rate appreciates and causes export prices to rise.

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