A-LevelEconomicsInternational economic issues9708/12 · Feb/Mar 2024 · Q251 Mark

A government decides to allow the country's currency to depreciate to remove the deficit on its current account of the balance of payments. What is the most likely reason why this would not work?

AThe country gains a competitive advantage from the depreciation.

BThe country has a surplus on its capital and financial accounts.

CThe price elasticities of demand for the country's exports and imports are greater than one.

DThere are high trade barriers with the country's main trading partners.

✓ Correct answer

D: There are high trade barriers with the country's main trading partners.

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Topic: International economic issues, A-Level Economics (syllabus 9708). Multiple choice, 1 mark.
Source: A-Level Economics, Feb/Mar 2024 Paper 1 Variant 2, question 25.

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