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Analyse how a fall in a country’s foreign exchange rate can cause inflation.
See it on the paper →Why would devaluing the international value of an economy’s currency help reduce unemployment?
See it on the paper →Discuss whether or not an appreciation of a country’s domestic currency will have negative effects on its economy.
See it on the paper →Analyse how a fall in a country’s foreign exchange rate could increase employment.
See it on the paper →what happened to Vietnam’s foreign exchange rate between 2010 and 2017.
See it on the paper →The following answer is a good level three (L3) response: ‘On the one hand, an appreciation of a country’s domestic currency would have a negative effect in the economy because it would reduce their exports. If the country’s currency appreciates then the cost of production would go up (L1) in relation to the other currency. If this is the case, local firms would become less competitive in the int...
— Examiner report, October/November 2021, 0455/21 Q4(d) (Cambridge)
This was generally well answered. A relatively high proportion of candidates were able to provide good links between a fall in a country’s foreign exchange rate and an increase in employment. Some candidates wrote about the fall in the value of the currency encouraging some of the country’s people to work abroad. Such an approach often did not consider whether these people were initially in employ...
— Examiner report, May/June 2021, 0455/22 Q5(c) (Cambridge)
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