Assuming the Marshall-Lerner condition holds, a significant depreciation of a country's currency under a floating exchange rate system is most likely to cause:

an improvement in the current account balance and an increase in domestic inflation.

a reduction in the domestic currency price of imports and a decrease in aggregate demand ( $A D$ ).

an increase in the foreign currency price of exports and a rise in domestic unemployment.

a deterioration in the current account balance and a decrease in cost-push inflation.

Assuming the Marshall-Lerner condition holds, a significant depreciation of a country's currency under a floating exchange rate system is most likely to cause:

an improvement in the current account balance and an increase in domestic inflation.

a reduction in the domestic currency price of imports and a decrease in aggregate demand ( $A D$ ).

an increase in the foreign currency price of exports and a rise in domestic unemployment.

a deterioration in the current account balance and a decrease in cost-push inflation.

2.6 The international economy (A-level only)

Question 58

Markscheme

2.6 The international economy (A-level only)

Question 58

Markscheme

2.6 The international economy (A-level only)

Question 58

2.6 The international economy (A-level only) Questions

2.6 The international economy (A-level only)

Question 58

2.6 The international economy (A-level only) Questions