When the pound appreciates, import expenditure will decrease and export revenue will decrease. This will worsen the UK current account balance.

Here's why:

1. When the pound appreciates (increases in value relative to other currencies), it becomes more expensive for foreign countries to buy UK goods. This leads to a decrease in export revenue because foreign demand for UK goods falls.

2. At the same time, an appreciated pound makes it cheaper for the UK to buy foreign goods. This leads to a decrease in import expenditure because the UK can now buy more foreign goods for the same amount of pounds.

3. The UK's current account balance is the difference between its export revenue and its import expenditure. If both export revenue and import expenditure decrease, and the decrease in export revenue is greater than the decrease in import expenditure (which is often the case when a currency appreciates), then the current account balance will worsen (become more negative or less positive).

Question

When the pound appreciates, import expenditure will decrease and export revenue will decrease. This will worsen the UK current account balance.

Here's why:

1. When the pound appreciates (increases in value relative to other currencies), it becomes more expensive for foreign countries to buy UK goods. This leads to a decrease in export revenue because foreign demand for UK goods falls.

2. At the same time, an appreciated pound makes it cheaper for the UK to buy foreign goods. This leads to a decrease in import expenditure because the UK can now buy more foreign goods for the same amount of pounds.

3. The UK's current account balance is the difference between its export revenue and its import expenditure. If both export revenue and import expenditure decrease, and the decrease in export revenue is greater than the decrease in import expenditure (which is often the case when a currency appreciates), then the current account balance will worsen (become more negative or less positive).

Knowee AI · Accepted Answer

When the pound appreciates, import expenditure will decrease and export revenue will decrease. This will worsen the UK current account balance.

Here's why:

1. When the pound appreciates (increases in value relative to other currencies), it becomes more expensive for foreign countries to buy UK goods. This leads to a decrease in export revenue because foreign demand for UK goods falls.

2. At the same time, an appreciated pound makes it cheaper for the UK to buy foreign goods. This leads to a decrease in import expenditure because the UK can now buy more foreign goods for the same amount of pounds.

3. The UK's current account balance is the difference between its export revenue and its import expenditure. If both export revenue and import expenditure decrease, and the decrease in export revenue is greater than the decrease in import expenditure (which is often the case when a currency appreciates), then the current account balance will worsen (become more negative or less positive).

Complete the following statement:When the pound appreciates, import expenditure will and export revenue will . This will the UK current

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Complete the following statement:

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