Australia’s foreign exchange rate changes over time. The value of Australia’s exports is usually above the value of its imports. Australia is Papua New Guinea’s chief trading partner. In 2019, the government of Papua New Guinea raised income tax to bring down its inflation rate. It also used other policy measures to lift its economic growth rate.
(a)[2]
Define the term foreign exchange rate.
(b)[4]
Explain two reasons that the value of a country’s exports might exceed the value of its imports.
(c)[6]
Analyse how a rise in income tax may affect a country’s inflation rate.
(d)[8]
Discuss whether governments should aim for a high rate of economic growth or not.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “The price or value of a currency” …