Economics (AS & A Level) · May / June 2024 · Paper 32 · Question 27

The macroeconomic objective of a government is to move the current account of the balance of payments from deficit to surplus. To achieve this, it devalues the currency. Under which condition would a devaluation of the currency achieve this objective?

1. Aif the combined price elasticity of demand for exports and imports is greater than 1
2. Bif the combined price elasticity of demand for exports and imports is less than 1
3. Cif the income elasticity of demand is less than 1
4. Dif other countries decide to impose tariffs on all imported goods and services

As printed in the paper