Economics 9708 · AS & A Level · 6.4

6.4 — practice question

(a)[8]

Explain, with the help of a diagram, how a depreciation of a country’s exchange rate influences that country’s rate of inflation.

(b)[12]

Inflation has both domestic and international effects on an economy. Discuss which effect is likely to be more significant.

Worked solution & mark scheme

This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Understanding of price changes arising from depreciation (lower export prices, raise import prices) (2 marks)” …

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