Economics 9708 · AS & A Level · 6.4

6.4 — practice question

(a)[8]

Using a diagram(s), Explain one demand factor and one supply factor that would make the value of a currency in a floating exchange rate system depreciate.

(b)[12]

Discuss how likely it is that monetary policy would succeed in reducing inflation in an economy operating with a floating exchange rate.

Worked solution & mark scheme

This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Knowledge: Accurate diagram — axes labelled correctly P/Q of currency (the vertical axis must clearly show that it is an exchange rate) (1 mark).” …

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