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CAIE A-Level Economics AS 6.4.5 Exchange Rates in Ad As Questions

Practise using AD/AS analysis to trace how exchange-rate appreciation and depreciation affect trade, inflation, employment and real output with CAIE Economics AS questions.

Syllabus
2026–2028
Course
Economics 9708
Level
AS

Exam points

  • Use AD/AS analysis to trace how an appreciation or depreciation changes exports, imports, aggregate demand, real output, employment and the price level.

CAIE A-Level Economics AS 6.4.5 Exchange Rates in Ad As Questions question 1

[Maximum number: 1]

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?

Figure for Question CAIE A-Level Economics AS 6.4.5 Exchange Rates in Ad As Questions question 1 — CAIE A-Level Economics AS
B

Option B as shown in the official source

C

Option C as shown in the official source

D

Option D as shown in the official source

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