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    Could someone help me on how to answer these please, thanks.

    QUESTION 16
    ‘TheUK steel industry pays for its imported inputs in US dollars and sells itsoutput abroad in euros.’Itfollows from the above that the UK steel industry will benefit most when thepound is

    A. strong against the US dollar, weak against the euro
    B. weak against the US dollar, weak against the euro
    C. weak against the US dollar, strong against the euro
    D. strong against the US dollar, strong against the euro





    QUESTION 18. The table below contains data on the components of aggregate demand in an economy in 2009. Which one is supported by the data?

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    (Original post by Travy)
    Could someone help me on how to answer these please, thanks.

    QUESTION 16
    ‘TheUK steel industry pays for its imported inputs in US dollars and sells itsoutput abroad in euros.’Itfollows from the above that the UK steel industry will benefit most when thepound is

    A. strong against the US dollar, weak against the euro
    B. weak against the US dollar, weak against the euro
    C. weak against the US dollar, strong against the euro
    D. strong against the US dollar, strong against the euro





    QUESTION 18. The table below contains data on the components of aggregate demand in an economy in 2009. Which one is supported by the data?

    Name:  m.jpg
Views: 161
Size:  27.5 KB
    Hello!

    For the first question, I believe it will be A.

    This is because, if you're familiar with the mnemonic 'SPICED' or 'WPIDEC' (Stronger Pound leads to Imports Cheaper and Exports Dearer, and, Weaker Pound leads to Imports Dearer and Exports Cheaper), to gain the most of the $, you want a strong Dollar, because then Imports are Cheaper. To gain the most of the €, you want a weak Euro, because then Exports are Cheaper.

    This means the UK steel industry will benefit the most when the Pound is strong against the US dollar, weak against the Euro.

    I hope this will help, and I hope it is correct! (I'm only AS economics and basically used my knowledge to answer this) If you have the answers, I would love to know if A. is the correct answer! )
 
 
 
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