Day: December 30, 2021

The current account of the balance of payments for Ruritania changed from £1,000M in 2019 to £-10,000M in 2020.

Assuming that nothing else changes, what is likely to be the impact in 2020 on GDP and the exchange rate in Ruritania?

Select ONE answer:

1. GDP – falls & Exchange rate – appreciates
2. GDP – falls & Exchange rate – depreciates
3. GDP – rises & Exchange rate – appreciates
4. GDP – rises & Exchange rate – depreciates

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Economics KS4 and KS5 classes.

The answer is 2

1. Not correct
2. Correct
3. Not correct
4. Not correct

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