Theme 4 AO3

Question 1

If all countries were to specialise in certain goods, what would happen?

Answer 1

Countries can import goods rather than trying to produce them > less risk > less opportunity cost.

Question 2

What are the effects of depreciation and exports

Answer 2

Weaker currency > greater exports > economic growth > unemployment reduced.

Question 3

What are the effects of depreciation and inflation?

Answer 3

Weaker currency > higher import prices > increase in inflation.

Question 4

What are the effects of depreciation and FDI flows?

Answer 4

Weaker currency > domestic assets cheaper > greater FDI.