Exam-style question (10/3/2020)
The questions are taken from page 78 in your revision guide.
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Explain the causes of a fall in a country’s exchange rate (8 marks).
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Discuss whether a fall in a country’s exchange rate will reduce a deficit on the current account of the balance of payments of the country (12 marks).
Figure 1. 8-mark question
Figure 2. 12-mark question
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Explain the effects of an appreciation of its currency on an economy’s inflation rate (8 marks).
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Discuss whether a rise in an economy’s inflation rate will cause the value of its currency to fall (12 marks).
Figure 3. 8-mark question
Figure 4. 12-mark question
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| Argument: | | Counterbalance argument: |
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| Key term |
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The following chart represents the essay from the revision guide (page 176).
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| {d} |<-----+ +--->| {d} |
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| market economy | | | | planned economy |
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| market forces | | | | distribution of income |
| resource allocation | | | | state planning |
| price mechanism | | | | merit/demerit goods |
| scarce resources | | | | |
| more expensive | | | | |
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| advantages of price | | | | advantages of planned |
| mechanism (...) | | | | economy (...) |
| downsides of price | | | | downsides of planned |
| mechanism (...) | | | | economy (...) |
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| the economic problem |
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v
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| Evaluation |
| {d} |
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