NSL is a business based in country $$$X$$$ ．It manufactures food products including bread and breakfast cereals．NSL uses lean production in its factory．Maintaining quality is important．NSL imports $$$15 \%$$$ of its raw materials．Changes in country X＇s exchange rate can affect businesses which import raw materials．NSL＇s Marketing Manager knows the business should respond to changes in consumer spending patterns．She is aware that market research can be used to help make business decisions．（a）Identify one way each of the following changes in country X＇s exchange rate might affect businesses which import raw materials． Depreciation： Appreciation： .......................................................................................................................................

Business

IGCSE&ALevel

CAIE

Exam No：0450_s25_qp_11 Year：2025 Question No：2(a)

Answer:

Award 1 mark for each way (max 2).
Points might include:
- Depreciation: Imports dearer/more expensive
- Appreciation: Imports cheaper

Knowledge points:

6.3.1.1. The concept of globalisation and the reasons for it

6.3.1.2. Opportunities and threats of globalisation for businesses

6.3.1.3. Why governments might introduce import tariffs and import quotas

6.3.2.1. Benefits to a business of becoming a multinational and the impact on its stakeholders

6.3.2.2. Potential benefits to a country and/or economy where a MNC is located, e.g. jobs, exports, increased choice, investment

6.3.2.3. Potential drawbacks to a country and/or economy where a MNC is located, e.g. reduced sales of local businesses, repatriation of profits

6.3.3.1. Depreciation and appreciation of an exchangerate

6.3.3.2. How exchange rate changes can affect businesses as importers and exporters of products, e.g. prices, competitiveness, profitability (exchange rate calculations will not be assessed)

Answer:

Knowledge points:

Solution:

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