Question

Impact of increase in exchange rate in national income

Answer 1

But the impact on inflation of a change in the exchange rate depends on what else is going on in the economy. An exchange rateappreciation causes a slower growth of real GDP because of a fall in net exports (reduced injection) and a rise in the demand for imports (an increased leakage in the circular flow).

Answer 2

but the impact of inflation of a change in the exchange rate depends on what else is going on in the economy,. An exchange rate appreciation causes a slower growth of real GDP because of a fall in net exports and a rise in the demand for imports..

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