Economics 9708 · AS & A Level · 6.4

6.4 — practice question

(a)[8]

Explain how exchange rates are set in a free market and how some governments intervene to manage their exchange rate.

(b)[12]

Explain the costs and benefits of a rising exchange rate and discuss whether, overall, an economy ‘would be damaged’ by a rising exchange rate.

Worked solution & mark scheme

This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “For knowledge and understanding of the process by which exchange rates are set in a free market.” …

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