Lesson 4.2.5

4.2.5 Exchange rates and global competitiveness Quiz: Pearson Edexcel Business, Unit 4

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson 4.2.5, Exchange rates and global competitiveness: 20 multiple choice questions for the Pearson Edexcel Business (9BS0), Unit 4: Global business, written with Revision Ninja.

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The 20 questions

  1. In international trade, what does an exchange rate measure?

    • Level of inflation
    • Value of currency
    • Tax on imports
    • Cost of borrowing

  2. What happens to the value of sterling during currency depreciation?

    • It rises
    • It stays constant
    • It fluctuates daily
    • It falls

  3. How does a business achieve cost competitiveness in global markets?

    • Lower unit costs
    • Higher selling prices
    • Increased branding costs
    • Unique product design

  4. What strategy creates competitive advantage by making a product unique to consumers?

    • Product differentiation
    • Market penetration
    • Penetration pricing
    • Cost leadership

  5. What is the effect of an appreciating pound on UK export prices?

    • Exports become untaxed
    • Export prices freeze
    • Exports become cheaper
    • Exports become dearer

  6. A UK product costs 50 in sterling and the exchange rate is 1.25 dollars per pound. What is its dollar price?

    • 50
    • 40
    • 62.5
    • 75

  7. The exchange rate falls from 1.25 to 1.00 dollars per pound. What is the percentage change in the dollar value of sterling?

    • A fall of 20%
    • A rise of 25%
    • A fall of 25%
    • A rise of 20%

  8. Why does a depreciating exchange rate benefit UK exporters in overseas markets?

    • Higher export tariffs
    • Rising production costs
    • Cheaper foreign prices
    • Lower profit margins

  9. How do domestic skill shortages directly impact international competitiveness?

    • Lower production costs
    • Increase wage costs
    • Appreciate exchange rates
    • Reduce import tariffs

  10. How should a business using a differentiation strategy react to a rival's price cut?

    • Highlight unique value
    • Reduce marketing spend
    • Match price cut
    • Lower product quality

  11. Why does high exchange rate volatility create difficulty for exporting businesses?

    • Unpredictable profit margins
    • Lower transport costs
    • Fixed exchange tariffs
    • Guaranteed higher sales

  12. What is the primary benefit of a weak domestic currency for exporting businesses?

    • Lower import tariffs
    • Cheaper export prices
    • Higher import prices
    • Reduced foreign demand

  13. What effect does currency appreciation typically have on export prices in foreign markets?

    • Demand becomes elastic
    • Export prices increase
    • Export prices fall
    • Export volumes rise

  14. How does a currency depreciation in a rival country affect a domestic firm's competitiveness?

    • Lowers domestic inflation
    • Increases price competitiveness
    • Reduces price competitiveness
    • Eliminates trade tariffs

  15. A firm reduces its unit cost from 40 to 36 through productivity gains. What is the percentage cut?

    • 40%
    • 36%
    • 10%
    • 4%

  16. Which factor directly provides a business with cost competitiveness in global markets?

    • High product differentiation
    • Unique brand identity
    • Patented technological features
    • Lower unit costs

  17. Why might a highly productive manufacturing firm still lose export sales abroad?

    • Falling corporation tax
    • Domestic currency depreciation
    • Domestic currency appreciation
    • Reduced production costs

  18. How can a business best overcome domestic skill shortages to maintain global competitiveness?

    • Cutting employee wages
    • Recruiting from abroad
    • Lowering output targets
    • Increasing advertising spend

  19. Which internal factor provides a business with a cost-based global competitive advantage?

    • Patented product design
    • Strong brand loyalty
    • Economies of scale
    • High product differentiation

  20. How can an exporter maintain demand when a strong currency raises its export prices?

    • Lowering product quality
    • Cost cutting
    • Product differentiation
    • Increasing price elasticity

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