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Economics (AS & A Level) · May / June 2023 · Paper 11 · Question 24

9708The reasons for international trade

A country's currency has depreciated against all the currencies of its main trading partners. How will the depreciation affect its terms of trade?

  1. AThe terms of trade will improve.
  2. BThe terms of trade will not change.
  3. CThe terms of trade will worsen.
  4. DThe terms of trade will worsen only if the depreciation causes inflation.

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Correct answer: C. The terms of trade will worsen.

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