On this day…20 years ago - Call for interest rates to rise to 15%

I thought this article would be interesting to compare to the current economic climate and could be useful in revising the effect of a change in interest rates on the exchange rate and on demand in the economy. I have written some GCSE style questions to go with the article. It may be useful to highlight the key aspects of the article to make it more suitable for GCSE pupils.

How are exchange rates determined? (4 marks)

Explain how an increase in interest rates could affect the strength of the pound (3 marks)

An increase in the base rate to 15% would have a positive impact on the economy in 1989. Do you agree? Give reasons for your answer using the article to help you. (8 marks)