The currency in the rest of the europe is the euro

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Reference no: EM13986771

In the following problem, assume that the UK currency is the pound sterling (PST) and the currency in the rest of the Europe is the euro (EUR).

a. Suppose that the PST appreciates relative to the EUR. For the following parts:

(i) In the UK:

- How would the export demand change? Why?

- How would the import demand change? Why?

- How would net exports change? Why?

(ii) In the rest of Europe:

- How would export demand change? Why?

- How would import demand change? Why?

- How would net exports change? Why?

Reference no: EM13986771

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