To what extent will this depreciation impact on future economic growth in the UK?
Edexcel A-Level Economics 25 Mark Question
The British pound fell by over 10% to a 30-year low against the US dollar after the UK voted to leave the European Union. To what extent will this depreciation impact on future economic growth in the UK? (June 2018)
Paragraph 1
- Argument: increase in exports leads to economic growth
- Diagram: right shift in AD
- Evaluation: depends on the size of the multiplier & the state of the economy
Paragraph 2
- Argument: increase in costs of raw materials slows down growth
- Diagram: left shift in SRAS
- Evaluation: Marshall-Lerner condition
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