May/June 2026 Paper 12

2026 · 30 questions · 30 parts · 30 marks

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30Exchange Rates International CompetitivenessHard1 mark

In the diagram,

D_{1}

and

S_{1}

are the initial supply and demand curves of the pound sterling (£) on the foreign exchange markets.

a foreign exchange market diagram for the pound sterling, price of £ in dollars on the vertical axis and quantity of £ on the horizontal axis: the initial demand curve D$_{1}$ and initial supply curve S$_{1}$ cross; a new demand curve D$_{2}$, shifted left of D$_{1}$, and a new supply curve S$_{2}$, shifted right of S$_{1}$, are also drawn

What will cause the demand curve to shift to

D_{2}

and the supply curve to

S_{2}