← A Level Economics Revision · All Currency depreciation questions · Home

A-Level Economics · Currency depreciation diagram question

Which point is the NEW equilibrium after the supply of pounds shifts to S₂?

▶ Try it in the game first

The diagram

The answer

Point F. S₂ crosses D at F: the rate falls to e₂ and the quantity of pounds traded rises to Q₂. After any shift, go to where the NEW curve crosses the one that didn't move. S₂ meets D at point F — a lower pound (e₂) and MORE pounds changing hands (Q₂). Both readings matter: it's the quantity of currency traded that rises, not output.

Test yourself properly

This is one of 5 questions on the currency depreciation diagram — every corner lettered, every wrong answer diagnosed.

▶ Play the currency depreciation game All questions & answers