Economics 9708 · AS & A Level · 6.4

6.4 — practice question

A country uses a fixed exchange rate system. What factor would create pressure for the country to devalue its currency?

  • Aa decrease in the country’s inflation rate relative to the inflation rates of other countries
  • Ba decrease in the tariffs on its products imposed by other countries
  • Can increase in its current account balance of payments deficit with other countries
  • Dan increase in the country’s interest rate relative to the interest rates of other countries

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