Suppose, due to political instability, Russians suddenly choose to purchase UK assets as opposed to Russian assets Which of the following statements is true regarding the value of the pound and UK net exports ?
Correct answer: B. The pound appreciates, and UK net exports fall
- A. The pound appreciates, and UK net exports rise
- B. The pound appreciates, and UK net exports fall
- C. The pound depreciates, and UK net exports rise
- D. The pound depreciates, and UK net exports fall
Explanation
Russian purchases of UK assets increase demand for pounds, causing the pound to appreciate. Appreciation makes UK goods more expensive to foreigners and imports cheaper, so UK net exports fall.
Last updated
About Macroeconomics
The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
Practise Macroeconomics
1,462 free Macroeconomics MCQs from Economics, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Exams that ask Economics questions like this
Economics is on 2 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
Related questions
1. The most widely traded currency in the foreign exchange market is the ?
85% of the world's population lives in developing countries and receives about _____ of the world's income?
A 44-nation survey regrading religions found that_________________?
A bank has excess reserves to lend but is unable to find anyone to borrow the money This will _________ the size of the money multiplier?
A capital account surplus might be expected to cause a current account deficit because the associated ?