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CAIE A-Level Economics AS 6.4.2 Floating Exchange Rate Questions

Practise explaining how currency demand and supply determine a floating exchange rate with CAIE Economics AS questions and mark schemes.

Syllabus
2026–2028
Course
Economics 9708
Level
AS

Exam points

  • Explain how demand and supply of currencies determine a floating exchange rate in the foreign-exchange market.

CAIE A-Level Economics AS 6.4.2 Floating Exchange Rate Questions question 1

[Maximum number: 1]

What is a disadvantage of operating a floating exchange rate system?

A

It makes it difficult to prioritise domestic economic policy aims.

B

It makes the prices of internationally traded goods less predictable.

C

It means that the government must keep significant foreign currency reserves.

D

It requires continuous government intervention in currency markets.

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