Jaisul Naik

* Normally, when your currency depreciates * exports increase and imports fall so balance of payments improves * However, * The J-curve shows that, when your currency depreciates * the balance of payments worsens. * This is because exports

* Summary * AD left shift * Evaluation * sign of high incomes - luxury goods being imported * pound will fall and current account deficit will automatically correct A current account deficit occurs when the total value

Monetary policy is the use of interest rates to influence the aggregate demand and therefore the inflation rate of an economy. Expansionary monetary policy involves the reduction of interest rates by the Bank