Explain the effects on the UK economy on a fall in the value of sterling.
Block Type
Knowledge Checkpoint
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Knowledge Checkpoint: Explain the effect on the UK economy on a fall in the value of sterling (2 marks).
You must explain 2 effects to gain full marks.
1 mark for each valid explanation.
A model answer could look something like this:
UK exports become more attractive to international buyers. This occurs because overseas citizens receive more sterling for their foreign currency, making British goods and services relatively cheaper (1).
National income and economic growth may rise. The increase in exports injects more money into the circular flow of income within the UK economy, potentially boosting overall economic activity (1).