Cambridge International (CAIE) · 11 International economic issues (A Level) · 11.2 Exchange rates

Cambridge International (CAIE) Economics past paper questions: Exchange rates

Every Cambridge International (CAIE) question on Exchange rates from 2023 to 2025: 2 essays and 11 multiple choice questions. It covers 11.1 Policies to correct disequilibrium in the balance of payments, 9.2 Economic growth and sustainability, 11.4 Characteristics of countries at different levels of development and 10.1 Government macroeconomic policy objectives. Each question links to its paper, mark scheme and examiner report.

Filter these in the tool

Subtopics11.1 Policies to correct disequilibrium in the balance of payments 29.2 Economic growth and sustainability 111.4 Characteristics of countries at different levels of development 110.1 Government macroeconomic policy objectives 1

Essay questions on exchange rates

Multiple choice questions

  1. A-level Paper 3, November 2025, Q18

    A country with a managed exchange rate has a persistent deficit on the current account of the balance of payments. It devalues its currency to reduce this deficit. Under which conditions will a devaluation help the government to achieve…

  2. A-level Paper 3, November 2025, Q22

    In an economy, the price elasticity of demand for imported raw materials is 0.3, and the price elasticity of demand for exports is also 0.3. Following a depreciation of the economy’s currency, what will the impact on inflation be?

  3. A-level Paper 3, November 2025, Q25

    What is a trade-weighted exchange rate?

  4. A-level Paper 3, June 2025, Q26

    The value of the currency of an open economy with a fixed exchange rate is significantly below its purchasing power parity value. If the economy decides to adopt a floating exchange rate, which of its macroeconomic policy aims is most…

  5. A-level Paper 3, March 2025, Q23

    Which policy would not lead to an increase in the value of a country’s currency?

  6. A-level Paper 3, November 2024, Q27

    An increase or decrease in exchange rates can take place in both a floating and a fixed exchange rate system but different terminology is used for each system. What is the correct terminology?

  7. A-level Paper 3, June 2024, Q27

    The macroeconomic objective of a government is to move the current account of the balance of payments from deficit to surplus. To achieve this, it devalues the currency. Under which condition would a devaluation of the currency achieve…

  8. A-level Paper 3, March 2024, Q25

    In which situation is devaluation of the currency most likely to cause inflation?

  9. A-level Paper 3, March 2024, Q28

    A country maintains its foreign exchange rate against the United States dollar, within a narrow but changing band. What is this type of exchange rate?

  10. A-level Paper 3, November 2023, Q24

    The exchange rate of an economy appreciates. Assuming that the Marshall–Lerner condition holds in this economy, what is the likely outcome for imported inflation and unemployment?

  11. A-level Paper 3, June 2023, Q26

    An economy imports most of the factors of production used in the manufacture of its exported goods. What effect would depreciation of this economy’s rate of exchange have?

Question text is quoted from the question papers, © Cambridge University Press & Assessment (UCLES), for students’ private study. Open the official papers and mark schemes from the links on each question. Examiner insights are written with AI assistance and moderated by Finn.