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Question SPM.1.SL.TZ0.3b

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Date May specimen first teaching 2021 Marks available [Maximum mark: 15] Reference code SPM.1.SL.TZ0.3b
Level SL Paper 1 Time zone TZ0
Command term Discuss Question number b Adapted from N/A
b.
[Maximum mark: 15]
SPM.1.SL.TZ0.3b
(b)

Using real-world examples, discuss the consequences of a fall in a country’s exchange rate.

[15]

Markscheme

Answers may include:

  • Definition: exchange rate.
  • Explanation: of consequences such as changes in the price level, economic growth, employment, quantities of imports and exports depending on elasticities, effects on competitiveness and changes in government policy.
  • Diagram: supply and demand diagram to show reduced demand or increased supply of a currency.
  • Synthesis (discuss): the magnitude of the reduction in the exchange rate, whether the economy is impacted positively or negatively in terms of growth, unemployment and inflation, effects on different sectors such as tourism and agriculture.
  • Examples: real-world examples of countries which have experienced the consequences of a reduced exchange rate.

N.B. It should be noted that definitions, theory and examples that have already been given in part (a), and then referred to in part (b), should be rewarded.

Syllabus sections