An increasing in Europe's taste for UK produced Hondas would cause the pound to ?
Correct answer: D. appreciate, but the total value of UK net export stays the same
- A. depreciate and would increase UK net exports
- B. appreciate and would increase UK net exports
- C. depreciate and would decrease UK net exports
- D. appreciate, but the total value of UK net export stays the same
Explanation
Greater European demand for UK goods increases demand for pounds, causing the pound to appreciate. The appreciation makes UK exports relatively more expensive and offsets the initial export increase, leaving net exports unchanged in the standard model.
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