A-LevelEconomicsInternational economic issues9708/12 · May/June 2021 · Q201 Mark

A government devalues its fixed exchange rate. What is most likely to be its aim?

Ato improve the terms of trade

Bto increase the level of aggregate demand

Cto reduce a current account surplus

Dto reduce demand-pull inflation

✓ Correct answer

B: to increase the level of aggregate demand

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Topic: International economic issues, A-Level Economics (syllabus 9708). Multiple choice, 1 mark.
Source: A-Level Economics, May/June 2021 Paper 1 Variant 2, question 20.

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