| Criteria | Marks |
|---|
| Provides a comprehensive discussion of the effects of a depreciation of a currency on the domestic businesses | 5 |
| Provides a sound discussion of the effects of a depreciation of a currency on the domestic businesses | 4 |
| Provides some discussion of the effects of a depreciation of a currency on the domestic businesses | 3 |
| Demonstrates some understanding of the effects of a depreciation of a currency | 2 |
| Provides some relevant information | 1 |
Sample answer:
A depreciation of a currency would have various impacts on import-competing and export-oriented businesses. For example, imported inputs such as raw materials become more expensive for businesses. This raises domestic production costs and prices, making these businesses less competitive. A depreciation can also benefit import-competing businesses by decreasing competition for more expensive foreign goods, resulting in more sales and increased profitability.
Export-oriented businesses benefit from depreciation as their products become cheaper for foreign buyers, and their international competitiveness improves.