exchange Rate 25 marker plan (depreciation of £)

KAA 1

Increased exports (e.g. machinery, pharmaceuticals), deceased cost of exports, increased demand, increased international competitiveness of domestic goods in foreign markets, increased output, increased export led growth, increased balance of trade, improve trade deficit

Eval 1

If world economy is in recession (e.g. 2008 financial crisis) demand for exports won't change much, exports muted by weak growth in Eurozone and global economy, mean demand inelastic, trade deficit may not improve, worsen CA

KAA 2

decreased imports (cars, food, oil) as increased price, increase AD, increase demand pull inflation, increased economic growth, improve CA

Eval 2

effect of depreciation may have time lag on CA, some imports are necessities so may not significantly decrease, AD not decrease

conclusion

improvement in CFI, decreased withdrawal, increased injection