Explain why a 'strong' pound might reduce the sales of steel in the UK.
A 'strong' pound means that UK steel that is exported abroad becomes more expensive. This leads to a contraction of demand for UK steel in foreign markets and as a result sales will fall. Conversely, a 'strong' pound reduces the price of imported steel into the UK domestic market. This will lead to demand switching from the expensive UK produced steel towards cheaper imported steel and so sales will fall even further.
SM
Related Economics GCSE answers
All answers ▸What's the difference between movements along and shifts in the demand curve?
What is a general equilibrium in a market?
Which one of the following is the most likely consequence of an increase in the division of labour in the production of smartphones?
Evaluate the use monetary policy to aid the economy's recovery just after a recession.