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If the value of the pound falls, Americans can purchase more British goods for less American dollars, so imports would increase. However that means that Britain would buy less of our goods, and thus the U.S. has less exports. Overall, the depreciation of the pound upsets their economy, which upsets our economy and doesn't exactly help us out of this recession. No new jobs are being created if we're not producing goods to export.
According to uktradeinvest.gov.uk: "The USA is Britain’s largest single export market, taking $57b of UK goods in 2007. The UK is the sixth biggest exporter to the US, after Canada, Mexico, Japan, China and Germany. The USA is also the leading overseas destination for British investment."
The falling of the British pound will, ironically, allow the US to buy more British goods. This is because at the strength of the pound falls, the US dollar will become more valuable in Britian. However there are also negatives. If British currency falls, British investment in the USA would slow, hurting our production.
It would, without a doubt, affect trade. Christina is right. The U.S. will have the ability to buy more British goods, so imports will increase. This will also cause the U.S. dollar to be of a greater value to Britain. They will not be able to afford our products, so both trade and production would decrease. In essence, exports will decrease.
The aforementioned influx of British imports (Christina, for the U.S. dollar will be of higher value than the pound. This will be good too because we may obtain a good supply of British currency, so that if it does eventually regain its value, we have large sums of it to trade with.
There are many pros and cons of the pound depreciating. First the Unites States economy will change. If the pound falls then the U.S. dollar will be worth more money. This will then cause for the imports and exports to change. The United States will not export as much to Britain, but will import more form them. This does not mean that the trading with other countries will stay the same. If we do not export to Britain as much we may not export to other European countries either.
Imports from Britain will most likely increase because it will be cheaper for us to purchase British goods. This will take away from our economy though because we will be outsourcing our jobs. Also, Britain will have no money to purchase/trade our goods
Because of the lessening of the pound, the dollar would have increased purchasing power in Great Britian. This would then increase the amount of trade between the two (moreso on the U.S. side) and increase imports. So our economy is helped just slightly as Britians is hurt. Yet, the value of currency is all relative so we may see more shifts of their pound or our dollar in the near future, sending the cycle of trade back to square one.
This would increase the purchasing power of the dollar, and decrease that of the pound. Thus we would be able to buy more of Britain's goods. Imports of their good would increase, altering the GDP (x-m).
The pro of the value of the pound dropping is that the value of the US dollar goes up meaning that the US can buy more British goods. But the con of the value dropping is that now the British will buy less of American goods because the pound will be worth close to nothing.
If the value of the pound falls, Americans can purchase more British goods for less American dollars, so imports would increase.
ReplyDeleteHowever that means that Britain would buy less of our goods, and thus the U.S. has less exports.
Overall, the depreciation of the pound upsets their economy, which upsets our economy and doesn't exactly help us out of this recession. No new jobs are being created if we're not producing goods to export.
According to uktradeinvest.gov.uk: "The USA is Britain’s largest single export market, taking $57b of UK goods in 2007. The UK is the sixth biggest exporter to the US, after Canada, Mexico, Japan, China and Germany. The USA is also the leading overseas destination for British investment."
ReplyDeleteThe falling of the British pound will, ironically, allow the US to buy more British goods. This is because at the strength of the pound falls, the US dollar will become more valuable in Britian. However there are also negatives. If British currency falls, British investment in the USA would slow, hurting our production.
It would, without a doubt, affect trade. Christina is right. The U.S. will have the ability to buy more British goods, so imports will increase. This will also cause the U.S. dollar to be of a greater value to Britain. They will not be able to afford our products, so both trade and production would decrease. In essence, exports will decrease.
ReplyDeleteThe aforementioned influx of British imports (Christina, for the U.S. dollar will be of higher value than the pound. This will be good too because we may obtain a good supply of British currency, so that if it does eventually regain its value, we have large sums of it to trade with.
ReplyDeleteThere are many pros and cons of the pound depreciating. First the Unites States economy will change. If the pound falls then the U.S. dollar will be worth more money. This will then cause for the imports and exports to change. The United States will not export as much to Britain, but will import more form them. This does not mean that the trading with other countries will stay the same. If we do not export to Britain as much we may not export to other European countries either.
ReplyDeleteImports from Britain will most likely increase because it will be cheaper for us to purchase British goods. This will take away from our economy though because we will be outsourcing our jobs. Also, Britain will have no money to purchase/trade our goods
ReplyDeleteBecause of the lessening of the pound, the dollar would have increased purchasing power in Great Britian. This would then increase the amount of trade between the two (moreso on the U.S. side) and increase imports. So our economy is helped just slightly as Britians is hurt. Yet, the value of currency is all relative so we may see more shifts of their pound or our dollar in the near future, sending the cycle of trade back to square one.
ReplyDeleteThis would increase the purchasing power of the dollar, and decrease that of the pound. Thus we would be able to buy more of Britain's goods. Imports of their good would increase, altering the GDP (x-m).
ReplyDeleteThe pro of the value of the pound dropping is that the value of the US dollar goes up meaning that the US can buy more British goods. But the con of the value dropping is that now the British will buy less of American goods because the pound will be worth close to nothing.
ReplyDeleteThe positive effect of the pound falling in Great Britain is obviously the increased value the America dollar will have.
ReplyDelete