Global events can really change how money moves in the UK. They can affect things like Aggregate Demand (AD) and Aggregate Supply (AS). Let’s look at some important ways these events can influence our economy:
Economic Shocks: When big financial problems happen, people may worry about their money. This makes them spend less. When people buy less, AD goes down.
Trade Changes: Sometimes, countries change their trade rules. For example, tariffs can make imported goods more expensive. When things cost more, people might spend less, which also lowers AD.
Supply Chain Disruptions: Natural disasters or pandemics can mess up how products are made and delivered. This can reduce AS because producers can’t get the materials they need. When it’s tougher to make things, prices go up and less is produced.
Exchange Rates: Global happenings can affect how strong our currency is. If the pound is strong, British products might cost more for people in other countries. This can hurt our AD from abroad because they might buy less.
In short, global events play a big role in how our economy works. They can push AD and AS in different ways, depending on what’s happening around the world.
Global events can really change how money moves in the UK. They can affect things like Aggregate Demand (AD) and Aggregate Supply (AS). Let’s look at some important ways these events can influence our economy:
Economic Shocks: When big financial problems happen, people may worry about their money. This makes them spend less. When people buy less, AD goes down.
Trade Changes: Sometimes, countries change their trade rules. For example, tariffs can make imported goods more expensive. When things cost more, people might spend less, which also lowers AD.
Supply Chain Disruptions: Natural disasters or pandemics can mess up how products are made and delivered. This can reduce AS because producers can’t get the materials they need. When it’s tougher to make things, prices go up and less is produced.
Exchange Rates: Global happenings can affect how strong our currency is. If the pound is strong, British products might cost more for people in other countries. This can hurt our AD from abroad because they might buy less.
In short, global events play a big role in how our economy works. They can push AD and AS in different ways, depending on what’s happening around the world.