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Question SPM.1.HL.TZ0.3a

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Date May specimen first teaching 2021 Marks available [Maximum mark: 10] Reference code SPM.1.HL.TZ0.3a
Level HL Paper 1 Time zone TZ0
Command term Explain Question number a Adapted from N/A
a.
[Maximum mark: 10]
SPM.1.HL.TZ0.3a
(a)

Explain how currency depreciation might affect a country’s current account balance.

[10]

Markscheme

Answers may include:

  • Definition: depreciation, current account balance.
  • Explanation: that a depreciation will make imports more expensive and exports cheaper but relative elasticities of demand will determine changes to volumes and thus influence the current account, Marshall-Lerner.
  • Diagram: exchange rate, J-curve or AD/AS diagram.

Syllabus sections