Quelpr
4 marksBalance of Payments and Exchange Rates

CAPE Economics Unit 2 · 2014 · Paper 2 · Question 6(b)

Use the diagram below to explain the effect of an increase in demand for imported cars in Trinidad and Tobago on the demand for foreign exchange and the price of the TT dollar (nominal exchange rate).

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Other parts of this question

  1. 6(a)(i)Distinguish between 'nominal exchange rate' and 'real exchange rate'.[4 marks]
  2. 6(a)(ii)Assume that the nominal exchange rate between Trinidad (TT) and Barbados (BBD) currency is TT 3 equivalent to BBD 1 and Barbados is the domestic country.…[2 marks]
  3. 6(a)(iii)a)State the effect on the price of Jamaican goods relative to foreign goods.[1 mark]
  4. 6(a)(iii)b)State the effect on Jamaican imports.[1 mark]
  5. 6(a)(iii)c)State the effect on Jamaican exports.[1 mark]
  6. 6(c)Discuss TWO advantages and ONE disadvantage of globalization on developing countries.[12 marks]

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