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Economics (AS & A Level) · May / June 2021 · Paper 12 · Question 20

9708Exchange rates

A government devalues its fixed exchange rate. What is most likely to be its aim?

  1. Ato improve the terms of trade
  2. Bto increase the level of aggregate demand
  3. Cto reduce a current account surplus
  4. Dto reduce demand-pull inflation

As printed in the paper

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Correct answer: B. to increase the level of aggregate demand

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