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    All other things being equal, an increase in the exchange rate of the pound against other currencies due to a rise in interest rates is most likely to cause an increase in the UK's:

    A. Surplus on the current account of the balance of payments
    B. Price of Imported Goods (Iknow its not this one)
    C. Level of unemployment
    D. Rate of economic growth

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    Just quoting in Puddles the Monkey so she can move the thread if needed
    (Original post by Puddles the Monkey)

    The answer to this one would be C, rise in unemployment levels.
    This is because as the currency appreciates (gets stronger), the UK's exports become less internationally competitive, hence lead to a reduced demand for British exports. This overall results in less labour being demanded by exporting firms, hence increasing unemployment levels.
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