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Economics (AS & A Level) · May / June 2022 · Paper 13 · Question 26

9708Exchange rates

The diagram shows the aggregate demand (AD) and aggregate supply (AS) for a country. The initial equilibrium is at point E. The sum of the price elasticities of demand for imports and exports for this country exceeds one. A devaluation of the country's exchange rate will cause aggregate demand to change. What will be the new equilibrium?

  1. AA
  2. BB
  3. CC
  4. DD

As printed in the paper

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Correct answer: B. B

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