Economics A Level (DONEEEEEEE): When Exports become more Expensive and Imports becomes more Cheaper, due to an Appreciation of a Nations Currency, what happens to the Economy?

Question

When Exports become more Expensive and Imports becomes more Cheaper, due to an Appreciation of a Nations Currency, what happens to the Economy?

eric_galvao · Accepted Answer

-Increase in Size of the Current Account Deficit / Reduced Current Account Surplus
-Fall in AD which may lead to Fall in output
-Unemployment may Rise as a result
-Impact on Inflation depends on Price Elasticity of Demand for Imports and for Domestic Goods

Economics A Level (DONEEEEEEE)

When Exports become more Expensive and Imports becomes more Cheaper, due to an Appreciation of a Nations Currency, what happens to the Economy?

-Increase in Size of the Current Account Deficit / Reduced Current Account Surplus -Fall in AD which may lead to Fall in output -Unemployment may Rise as a result -Impact on Inflation depends on Price Elasticity of Demand for Imports and for Domestic Goods

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