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2.6 The international economy (A-level only)

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Question 46

In Country Alpha, nominal wages increase by 12% over a two-year period, while labour productivity increases by 4%. Over the same period, its main trading partner, Country Beta, experiences a 3% increase in nominal wages and a 9% increase in labour productivity. Assuming nominal exchange rates remain unchanged, which of the following is the most likely consequence of these changes?

A

A deterioration in Country Alpha's relative price competitiveness.

B

An appreciation of Country Alpha's currency on the foreign exchange market to correct the trade imbalance.

C

A 14%14\%14% decrease in Country Alpha's terms of trade.

D

An expansion of Country Alpha's export volume to Country Beta.

Markscheme

2.6 The international economy (A-level only) Questions

  1. A Level
  2. /Economics
  3. /2.6 The international economy (A-level only)

310 exam-style questions on AQA A Level Economics 2.6 The international economy (A-level only), covering 2.6.1 Globalisation, 2.6.2 Trade, 2.6.3 The balance of payments, 2.6.4 Exchange rate systems, and 2.6.5 Economic growth and development. Each one has a worked solution and a mark scheme showing where the marks go.

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