Economics appreciating pound PDF

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Appreciating pound....

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Economics

SPICED. Strong pound imports cheap exports dear. An appreciating currency is when the other currency gets bigger An appreciating pound is when £1: $2 increases to £1: $3 Is this good/bad for UK exporters - good UK Importers - bad UK tourists to America - good A depreciating pound is when the value of the pound decreases in a floating exchange system. Is this good/bad for UK exporters - good Uk importers - bad Uk tourists to USA – bad What does the UK export as goods? Vehicles, gems, precious materials, mineral fuels including oil, electrical machinery, pharmaceuticals. What does the UK export as services? Financial, travel, transportation, insurance and pension. Explain what is meant by primary income? the net flow of profits, interest and dividends from investments in other countries and net remittance from migrant workers. Explain what is meant by secondary income? Explain three factors that can worsen the balance of payments deficit - overvalued exchange rate if the currency is overvalued imports will be cheaper and therefore there will be a higher quantity of imports, economic growth - If there is an increase in national income, people will tend to have more disposable income to consume goods. If domestic producers cannot meet the domestic demand, consumers will have to import goods from abroad, higher inflation - inflation rises faster than our main competitors then it will make UK exports less competitive and imports more competitive. This will lead to deterioration in the current account. Explain three different factors that can improve the balance of payments position. Demand management: Reductions in government spending, higher interest rates and higher taxes could all have the effect of dampening consumer demand reducing the demand for imports....