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Economics (AS & A Level) · May / June 2022 · Paper 13 · Question 24

9708Exchange rates

A country operates a fixed exchange rate. There is a major fall of international confidence in its government’s economic policies. What is likely to be the result?

  1. Aa fall in its foreign exchange rate
  2. Ba fall in its foreign exchange reserves
  3. Ca rise in its capital inflows
  4. Da rise in its terms of trade

As printed in the paper

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Correct answer: B. a fall in its foreign exchange reserves

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