Economics 9708 · AS & A Level · 6.4
Use a diagram to show how a fall in the rate of interest in a country may bring about a change in its foreign exchange rate.
Discuss whether an increase in its exchange rate or a decrease in its exchange rate is more beneficial for an economy.
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Knowledge and understanding of the process leading to an outflow of capital as a result of a fall in the rate of interest (leading to a shift of supply to the right or demand to the left or both).” …