impacts of exchange rate appreciation and depreciation

Question 1

appreciation monogram vs depreciation

Answer 1

Strong
Pound
Imports
Cheap
Exports
Dear

Weak currency
Imports
Dear
Imports
Cheap

Question 2

appreciation graphs and depreciation on SRAS/AD model

Answer 2

-fall in AD
-fall in SRAS

-rise in AD
-RIse in SRAS

Question 3

analysis of appreciation

Answer 3

-cons
-lower growth- CA deficit
-higher unemployment in exporting (exports more expensive) and domestic industries(compete)

-pros
-lower inflation
-cheaper imports: living standard
-potentially efficiency gains for domestic producers

Question 4

analysis of depreciation

Answer 4

-increase in employment in exporting and domestic industries