A-LevelEconomicsInternational economic issues9708/12 · Feb/Mar 2021 · Q221 Mark

What will be the immediate effect of a devaluation of an economy's foreign exchange rate?

AThe price of imported goods in the domestic currency will fall.

BThe price of imported goods in the domestic currency will rise.

CThe price of imported goods in the foreign currency will fall.

DThe price of imported goods in the foreign currency will rise.

✓ Correct answer

B: The price of imported goods in the domestic currency will rise.

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Topic: International economic issues, A-Level Economics (syllabus 9708). Multiple choice, 1 mark.
Source: A-Level Economics, Feb/Mar 2021 Paper 1 Variant 2, question 22.

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