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Trade Unions: Pros and Cons

Question

Negative impacts of currency appreciation

Category:

International Trade and Exchange Rates

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I. 🍃Introduction
- Definition of currency appreciation
- Importance of understanding the impact of currency appreciation on the economy

II. Negative impact of currency appreciation
- Price of exports will be higher, leading to a decrease in export revenue
- Price of imports will be lower, leading to an increase in import spending
- Decrease in demand for domestic products, leading to a decrease in demand for labor
- Decrease in current account surplus/increase in current account deficit
- Lower economic growth

III. Why currency appreciation will not have a negative impact
- Price of imports will be cheaper, leading to an increase in affordability of imports and an increase in standards of living
- Price of imported raw materials/machinery will be lower, leading to a lower cost of production and a lower final price
- PED for exports and imports might be inelastic
- May encourage foreign investment as there may be increased confidence in the country's future economic prospects

IV. Case study: Japan's currency appreciation in the ➡️1➡️9➡️80s
- Explanation of Japan's currency appreciation
- Negative impact on Japan's economy
- Positive impact on Japan's economy

V. 👉Conclusion
- Summary of the impact of currency appreciation on the economy
- Importance of considering both the negative and positive impacts of currency appreciation when analyzing its impact on the economy.

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