Q1:

Use the information in the extract to answer the questions below.

Turkey's picturesque Cappadocia region has attracted over 2.5 million tourists in the first eight months of this year, breaking its all-time record, according to official figures.

Source: www.dailysabah.com

(i)

Explain the effect of the high tourist arrivals on the value of the currency of Turkey, the Turkish lira. Use a demand and supply diagram to illustrate your answer.

(ii)

Use your answer to part (i) to state the effect of the currency change on the value of Turkey's net export.

Q2:

Using the IS-LM diagram, illustrate and explain the effects of the following events in an economy

(i)

A contractionary fiscal policy.

(ii)

A rise in the general price level.