9708/22/F/M/24

• Explain what is meant by a depreciation of the exchange rate and consider whether a depreciation is likely to increase domestic real output. [8]

9708/22/F/M/23

• With the help of a diagram, explain what is meant by an appreciation of a floating exchange rate and consider whether a country can only benefit from the appreciation of its currency. [8]

9708/22/O/N/22 

An economy adopts a freely floating exchange rate. 

• Explain how this economy’s exchange rate is likely to be affected when its inflation rate is much higher than inflation rates in its trading partners. [8] 

9708/21/O/N/22 

• Explain, with the use of a diagram(s), two factors that could bring about a depreciation in the value of a country’s exchange rate in a freely floating exchange rate system. [8] 

9708/21/M/J/22 

• Explain why a fixed exchange rate could cause difficulties for a country that has one. [8] 

9708/21/O/N/21 

• With the aid of a diagram, explain how a central bank intervenes to maintain a fixed exchange rate when the economy is experiencing a current account deficit on its balance of payments. [8] 

• Discuss whether expenditure-reducing policies are likely to reduce the current account deficit on the balance of payments for an economy with a floating exchange rate. [12] 

9708/21/M/J/21 

• With the aid of a diagram(s), explain one demand factor and one supply factor that would cause the value of a currency in a floating exchange rate system to depreciate. [8] 

• Discuss how likely it is that monetary policy would be successful in reducing inflation in an economy with a floating exchange rate. [12] 

9708/21/M/J/20 

• Explain, with the aid of a diagram, one demand factor and one supply factor that can cause the depreciation of a foreign exchange rate. [8] 

• Discuss whether an appreciation of a country’s foreign exchange rate is likely to cause both a rise in inflation and a decrease in employment in its economy. [12]