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Exchange rates


Question 1

Using diagrams, explain what would happen to Sterling, other things being equal, if:

    1. There are more tourists into the UK.
    1. Foreign speculators sell Sterling.
    1. UK interest rates rise relative to those of the UK’s trading partners.

Question 2

Analyse one likely effect of a fall in the value of Sterling on a particular market in the UK micro-economy. You will need a diagram to support this answer.