Exchange Rates and the Balance of Payments (id: 8918e0936)

本题目来源于试卷: Exchange Rates and the Balance of Payments，类别为 IB经济学

[单选题]

Year	Philippine Peso per Euro
2020	56.19
2023	60.22

Using the information from the table above, how may the change in the exchange rate between 2020 and 2023 affect the inflation rate in the Philippines from the choices below.

I. Increased net exports will increase aggregate demand, causing demand-pull inflation.
II. Higher costs of imported intermediate goods, machinery, and equipment will cause short-run aggregate supply to decrease, leading to cost-push inflation.
III. Aggregate demand will fall, leading to deflation.
IV. Aggregate supply will increase, leading to deflation.

A. I and II only
B. II and III only
C. III and IV only
D. IV only


参考答案:  A


本题详细解析:

A

$\underset{‾}{\text{Explanation}}$:
Choice (I) When the peso depreciates, Filpino exports become relatively cheaper, while imports become relatively more expensive. An increase in net exports shifts the aggregate demand curve to the right causing demand-pull inflation.

Choice (II) An increase in the cost of imported inputs increases production costs, shifting the short-run aggregate supply curve to the left, increasing the average price level and decreasing real GDP in equilibrium.

Choice (III) Depreciation should improve the trade balance, increasing aggregate demand.

Choice (IV) Depreciation raises the cost of imported inputs, decreasing aggregate supply.

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