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2.6 The international economy (A-level only)

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Question 27

A nation is experiencing a persistent current account deficit on its balance of payments. Assuming the Marshall-Lerner condition holds, which one of the following combinations of policy changes and economic conditions is most likely to reduce this current account deficit?

A

Expansionary monetary policy and a high rate of domestic inflation relative to trading partners

B

An increase in the domestic marginal propensity to import and a depreciating exchange rate

C

Implementation of contractionary fiscal policy and a depreciating exchange rate

D

A decrease in domestic labour productivity and an appreciating exchange rate

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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