Assume that the United Kingdom has an overall trade deficit and that the British pound depreciates against the dollar. Theory suggests that following the depreciation in currency, the United Kingdom should witness an improvement in their balance of trade or at least a J-curve pattern in their balance of trade. 

Explain how this might happen (i.e how an improvement in the balance of trade might occur and why it might not be immediate).

Answer rating: 100% (QA)

The depreciation of the British pound can lead to an improvement in the United Kingdoms balance of trade or at least a Jcurve pattern due to several factors 1 Price Competitiveness A depreciation in t... View the full answer