A-LevelEconomicsInternational economic issues9708/12 · May/June 2021 · Q271 Mark

Increased international competition leads to a worsening in a country’s current account balance. In the absence of any offsetting factors, how is this likely to affect the exchange rate and domestic cost-push inflation?

Aappreciate ; decrease

Bappreciate ; increase

Cdepreciate ; decrease

Ddepreciate ; increase

✓ Correct answer

D: depreciate ; increase

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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 27.

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