Questions on exchange rates

Questions on exchange rates

Question 1

Using diagrams, explain what would happen to sterling, or another currency of your choice, other things being equal, if:

  1. There are more tourists into the country.
  2. Foreign speculators sell the currency.
  3. Interest rates rise relative to those of the the county’s major trading partners.

Question 2

Analyse one likely effect of a fall in the value of the UK pound or the US dollar on a particular market in the UK or the USA. You will need a diagram to support this answer.