Deal of The Day! Hurry Up, Grab the Special Discount - Save 25% - Ends In 00:00:00 Coupon code: SAVE25
Welcome to Pass4Success

- Free Preparation Discussions
Mail Us support@pass4success.com
Location US
Mob_nav_barsMENU

CIMAPRA17-BA1-1 Exam - Topic 4 Question 114 Discussion

'The has risen against other currencies since August, defying forecasters who thought that the UK's widening trade deficit must cause the 's exchange rate to fall.'From the above information, it can be concluded that, since August
D) The strengthening pound has improved the UK balance of payments on current account
A) UK exports have become less price competitive
B) The UK inflation rate has increased
C) UK interest rates must have increased

CIMAPRA17-BA1-1 Exam - Topic 4 Question 114 Discussion

Actual exam question for CIMA's CIMAPRA17-BA1-1 exam
Question #: 114
Topic #: 4
[All CIMAPRA17-BA1-1 Questions]

'The has risen against other currencies since August, defying forecasters who thought that the UK's widening trade deficit must cause the 's exchange rate to fall.'

From the above information, it can be concluded that, since August

Show Suggested Answer Hide Answer
Suggested Answer: D

by Tegan at Jul 10, 2025, 12:14 AM

Limited Time Offer

25%

Off

Get Premium CIMAPRA17-BA1-1 Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

0/2000 characters
Submit Cancel
Mona
7 months ago
UK interest rates must have gone up for this to happen.
upvoted 0 times
...
Carla
7 months ago
I totally agree, the trade deficit shouldn't have led to this!
upvoted 0 times
...
Erasmo
7 months ago
The pound has been strong since August, surprising many.
upvoted 0 times
...
Marci
8 months ago
Strengthening pound? That's unexpected!
upvoted 0 times
...
Precious
8 months ago
Wait, how can the pound rise with a widening trade deficit?
upvoted 0 times
...
Alaine
8 months ago
I think B is unlikely because a rising currency usually doesn't correlate with a higher inflation rate, but I'm not completely confident about that.
upvoted 0 times
...
Curtis
8 months ago
I feel like the trade deficit usually leads to a weaker currency, so it's confusing. Maybe D is correct if the pound's strength is somehow helping the balance of payments?
upvoted 0 times
...
Tashia
8 months ago
I remember a practice question that linked interest rates and currency strength, so C could be a possibility if the pound is strengthening.
upvoted 0 times
...
Cassandra
9 months ago
I'm not entirely sure, but I think if the pound is rising, it might make UK exports less competitive, which could be why A seems plausible.
upvoted 0 times
...
Alyce
9 months ago
Good point, John. I'm leaning towards D - the strengthening pound has improved the UK's current account balance. That would explain why the pound is rising despite the trade deficit.
upvoted 0 times
...
Remona
9 months ago
I'm not so sure. The question says the pound has risen "defying forecasters" who expected it to fall due to the trade deficit. That suggests the strengthening pound is not due to interest rates.
upvoted 0 times
...
Noble
9 months ago
I think the answer is C - UK interest rates must have increased. A stronger currency usually indicates higher interest rates, which would attract more investment in the UK.
upvoted 0 times
...
Blossom
9 months ago
Okay, let's think this through. The key information is that the pound has risen against other currencies, even though the UK has a widening trade deficit. That's interesting.
upvoted 0 times
...
Stephen
9 months ago
This question seems straightforward, but I want to make sure I understand the logic behind it before answering.
upvoted 0 times
...
Una
11 months ago
Ah, the joys of economics – where the answers are made up and the points don't matter. I'm just going to close my eyes and point to one of these options. What could possibly go wrong?
upvoted 0 times
...
Karima
11 months ago
Ah, the age-old dilemma: do I go with the logical answer, or do I throw caution to the wind and pick the wildcard? I'm feeling rebellious today, so I'm going with B. Inflation? Who needs it! Let's just print more money and call it a day.
upvoted 0 times
Virgie
10 months ago
User 3: I'll go with C, interest rates must have increased.
upvoted 0 times
...
Anthony
10 months ago
User 2: I'm going with D, the strengthening pound must have improved the balance of payments.
upvoted 0 times
...
Jerry
11 months ago
User 1: I think A is the correct answer.
upvoted 0 times
...
...
Alyce
11 months ago
I think C) UK interest rates must have increased, leading to the rise in the pound.
upvoted 0 times
...
India
12 months ago
This is a tricky one. I'm torn between B and D. Maybe the UK is just really good at exporting luxury goods to the wealthy elite? Or perhaps they've discovered a secret money-printing machine. Either way, I'm feeling lucky with D!
upvoted 0 times
Eden
11 months ago
I see your point, but I still think D is the better choice. Let's go with that.
upvoted 0 times
...
Luisa
11 months ago
But what about B? Wouldn't an increase in inflation rate also affect the exchange rate?
upvoted 0 times
...
Harrison
11 months ago
I think D makes sense. A stronger pound would help improve the balance of payments.
upvoted 0 times
...
...
Roxane
12 months ago
I disagree, I believe the answer is D) The strengthening pound has improved the UK balance of payments on current account.
upvoted 0 times
...
Mable
1 year ago
I'm going with C. Increased interest rates would definitely attract more foreign investment and drive up the value of the pound. Besides, who really understands these economic things anyway?
upvoted 0 times
Mindy
10 months ago
C) UK interest rates must have increased
upvoted 0 times
...
Jospeh
12 months ago
A) UK exports have become less price competitive
upvoted 0 times
...
...
Rupert
1 year ago
Hmm, D seems like the obvious choice here. If the pound has strengthened, it would improve the UK's trade balance, right? Can't be A or B either, so D it is.
upvoted 0 times
Carmela
12 months ago
Yeah, I think you're right. It's all about that balance of payments in the end.
upvoted 0 times
...
Tracey
12 months ago
I agree, D seems like the most logical option. A stronger pound would definitely help improve the UK's balance of payments.
upvoted 0 times
...
...
Micaela
1 year ago
I think the answer is A) UK exports have become less price competitive.
upvoted 0 times
...

Save Cancel