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2.6 The international economy (A-level only)

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Question 7

Which one of the following correctly describes how market forces under a floating exchange rate system act to correct a balance of trade imbalance?

A

A trade deficit causes an excess demand for the currency, leading to an appreciation that increases the competitiveness of exports.

B

A trade deficit causes an excess supply of the currency, leading to a depreciation that improves the competitiveness of exports.

C

A trade surplus causes an excess supply of the currency, leading to a depreciation that makes imports relatively cheaper.

D

A trade surplus causes an excess demand for the currency, leading to an appreciation that improves the competitiveness of exports.

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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