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2.6 The international economy (A-level only)

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Question 67

An economy operating under a floating exchange rate system experiences a sharp depreciation of its currency. Assuming the Marshall-Lerner condition holds, which one of the following is most likely to occur as a result of this?

A

A fall in aggregate demand and a deterioration of the balance of payments on current account

B

A rise in aggregate demand and an improvement in the terms of trade

C

A rise in aggregate demand and an increase in the rate of inflation

D

A fall in aggregate demand and a decrease in the rate of inflation

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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