The United Kingdom produces computers and sells them to Russia. At the same time

Question

The United Kingdom produces computers and sells them to Russia. At the same time Russia produces cars and selis them to the United Kingdom Suppose there is an appreciation in the pound. This will cause A. A decrease in irports into the Unted Kingdom and an increase in exports to Russia, which w·OR se an inrease in aggogate demand real ape . Adecrease in imports into United Kingdom and a decrease in export s to Russia, which wll cause a decrease in aggregate demand and real GDP ° C. An increase in imports into the United Kingdom and an increase in exports to Russia which wn cause an increase in aggregate demand and real GDP O D. An increase in imports into the United Kingdom and a decrease in exports to Russia, which will cause a decrease in aggregate demand and real GDP

Explanation / Answer

1) Appreciation of pound will decrease the export of United Kingdom and will increase the import of U.K. And AD curve will shift to the left

Ans is D

2)Decrease in spending will decrease the real gDP and decrease(lower) the price level.

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