Assess the impact of a persistent current account deficit on the macroeconomic performance of the UK economy

AQA A-Level Economics Paper 2 June 2018

Using the data in the extracts and your knowledge of economics, assess the impact of a persistent current account deficit on the macroeconomic performance of the UK economy. (25 marks)

Plan

• Introduction: current account deficit, macroeconomic objectives
• Paragraph 1:
  • Argument: on the one hand, a current account deficit is damaging as it can cause unemployment
  • Diagram: left shift in AD
  • Evaluation: 5.4% percent of GDP, also can be cyclical
• Paragraph 2:
  • Argument: on the other hand, a current account deficit doesn't have much impact as it can usually self-correct
  • Diagram: exchange rates diagram
  • Evaluation: depends on the reasons; structural trade deficit

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