Table 29-2

-All else equal,a depreciation of the British pound relative to currencies such as the euro and the U.S.Dollar should ________ the current account balance in great Britain and therefore ________ the financial account balance in Great Britain.

Question

Table 29-2
 
-All else equal,a depreciation of the British pound relative to currencies such as the euro and the U.S.Dollar should ________ the current account balance in great Britain and therefore ________ the financial account balance in Great Britain.

Quizplus · Accepted Answer

A depreciation of the British pound makes British exports cheaper and imports more expensive, likely increasing the current account balance. This would lead to a decrease in the financial account balance as more capital flows out to pay for the increased net exports.

Table 29-2 -All Else Equal,a Depreciation of the British Pound Relative to British