Explain the impact of a weak exchange rate of Sterling on the UK Balance of Payments
Block Type
Knowledge Checkpoint
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Explain the impact of a weak exchange rate of Sterling on the UK balance of payments (2 marks).
1 mark for each valid explanation.
1 mark for a valid development.
A model answer will look like:
A weak exchange rate of the sterling will improve the current account balance as UK exports become cheaper for foreign buyers, potentially boosting exports (1).
Simultaneously, imports become more expensive for UK consumers, which may lead them to buy more domestic products instead (1).