A-LevelEconomicsInternational economic issues9708/12 · May/June 2014 · Q271 Mark

What would lead a country to move from a surplus to a deficit on the current account of the balance of payments?

Adepreciating exchange rate combined with a high rate of inflation and falling productivity

Bdepreciating exchange rate combined with a low rate of inflation and rising productivity

Can appreciating exchange rate combined with a high rate of inflation and falling productivity

Dan appreciating exchange rate combined with a low rate of inflation and rising productivity

✓ Correct answer

C: an appreciating exchange rate combined with a high rate of inflation and falling productivity

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Topic: International economic issues, A-Level Economics (syllabus 9708). Multiple choice, 1 mark.
Source: A-Level Economics, May/June 2014 Paper 1 Variant 2, question 27.

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