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CAIE A-Level Economics AS 4.3.2 Ad Components Questions

Practise applying C + I + G + (X − M), calculating aggregate demand, and explaining how consumption, investment, government spending and net exports change total demand.

Syllabus
2026–2028
Course
Economics 9708
Level
AS

Exam points

  • Use C + I + G + (X − M) to identify the components of aggregate demand and explain how changes in each component affect total demand.

CAIE A-Level Economics AS 4.3.2 Ad Components Questions question 1

[Maximum number: 1]

A government succeeds in changing a current account deficit into a current account surplus.
Why might this current account surplus increase the country's inflation rate?

A

It raises Aggregate Demand.

B

It raises production costs.

C

It reduces the exchange rate.

D

It reduces the money supply.

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