Economics SL
4
Chapters
96
Notes
Unit 1 - Intro to Econ & Core Concepts
Unit 2 - Microeconomics
Unit 3 - Macroeconomics
Unit 4 - The Global Economy
Economics SL
Unit 4 - The Global Economy
Understanding The Impacts Of Exchange Rate Changes
565 words
3 mins read
Last edited on 5th Nov 2024
Table of content
Exchange rates basics
- Current Account: Think of it as a country's wallet for international trade. It shows the difference between exports (X) and imports (M). If X > M, we have a trade surplus. If M > X, we have a trade deficit.
- Net Exports (NX): It's just X - M, and it's part of what we call aggregate demand.
Depreciation of currency (Your money's worth less!)
- Exports: Cheaper abroad and more competitive (Yay! More people want our stuff! 🎉).
- Imports: Pricier at home, and less attractive (Boo! Everything costs more! 😟).
- Real-World Example: Let's pretend £1.00 went from being €4.00 to €2.00. UK's Celtic swords that cost £100 become cheaper in the Eurozone, while French wine at €40 per bottle gets pricier in the UK. Cheers or tears? 🍷
- Effects on Economy
- Trade deficit might shrink.
- Economic growth may happen (Export-led growth 🚀).
- Inflation might creep in if the economy's already buzzing.
- Cyclical unemployment (that temporary kind) might decrease.
- Living standards may rise for some, especially in the export sector.
Appreciation of currency (Your money's worth more!)
- Exports: Pricier abroad and less competitive (Ouch! 🙁).
- Imports: Cheaper at home and more attractive (Yay! Shopping spree! 🛒).
- Effects on Economy
- Trade surplus might shrink.
- Economic growth could slow down.
- Might help reduce inflation.
- Cyclical unemployment might increase.
- Living standards might improve for low-income households (more purchasing power!).
Special cases & industries
- Tourism: Depreciation helps local tourism (foreigners find it cheaper). Appreciation helps residents traveling abroad (Vacay time! ✈️).
- Importers and Exporters: Different strokes for different folks! Depreciation helps exporters, appreciation aids importers.
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Economics SL
Unit 4 - The Global Economy
Understanding The Impacts Of Exchange Rate Changes
565 words
3 mins read
Last edited on 5th Nov 2024
Table of content
Exchange rates basics
- Current Account: Think of it as a country's wallet for international trade. It shows the difference between exports (X) and imports (M). If X > M, we have a trade surplus. If M > X, we have a trade deficit.
- Net Exports (NX): It's just X - M, and it's part of what we call aggregate demand.
Depreciation of currency (Your money's worth less!)
- Exports: Cheaper abroad and more competitive (Yay! More people want our stuff! 🎉).
- Imports: Pricier at home, and less attractive (Boo! Everything costs more! 😟).
- Real-World Example: Let's pretend £1.00 went from being €4.00 to €2.00. UK's Celtic swords that cost £100 become cheaper in the Eurozone, while French wine at €40 per bottle gets pricier in the UK. Cheers or tears? 🍷
- Effects on Economy
- Trade deficit might shrink.
- Economic growth may happen (Export-led growth 🚀).
- Inflation might creep in if the economy's already buzzing.
- Cyclical unemployment (that temporary kind) might decrease.
- Living standards may rise for some, especially in the export sector.
Appreciation of currency (Your money's worth more!)
- Exports: Pricier abroad and less competitive (Ouch! 🙁).
- Imports: Cheaper at home and more attractive (Yay! Shopping spree! 🛒).
- Effects on Economy
- Trade surplus might shrink.
- Economic growth could slow down.
- Might help reduce inflation.
- Cyclical unemployment might increase.
- Living standards might improve for low-income households (more purchasing power!).
Special cases & industries
- Tourism: Depreciation helps local tourism (foreigners find it cheaper). Appreciation helps residents traveling abroad (Vacay time! ✈️).
- Importers and Exporters: Different strokes for different folks! Depreciation helps exporters, appreciation aids importers.
Unlock the Full Content!
Dive deeper and gain exclusive access to premium files of Economics SL. Subscribe now and get closer to that 45 🌟