Interest & Exchange Rates

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1. Which of the following affect the demand for the pound on the foreign exchange market?

  • UK speculator buying shares on the New York Stock Exchange
  • UK tourists going on holiday
  • Boeing (US aircraft manufacturer) buying engines from Rolls-Royce in the UK
  • ICI (a UK firm) buying raw materials from overseas
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2. What is an interest rate?

  • The rate at which foreign goods are bought
  • A tariff on foreign imports
  • The percentage reward or payment over a period of time that is given to savers on savings or paid by borrowers on loans
  • A tax paid by consumers when buying foreign goods

3. What is meant by a fixed interest rate?

  • Interest rates will only change if the prime minister says they must
  • An interest rate which can flucuate
  • An interest rate which will not change at whatsoever over the life of a loan
  • A tax paid by tradesmen

4. In the UK, the base interest rate is set by...

  • Monetary Policy Commitee
  • The house of commons
  • The chancellor of the exchequer
  • Chief secretary to the treasury

5. If the value of the pound decreases, who will be affected?

  • UK tourism
  • UK exporters of goods
  • UK importers of materials
  • UK businesses

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