ECONOMICS
AGGREGATE DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Its AD curve would shift to the RT
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Its AD curve would shift to the LT
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Its AS curve would shift to the LT
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Its AS curve would shift to the RT
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Detailed explanation-1: -The EU, taken as a whole is the UK’s largest trading partner. In 2021, UK exports to the EU were £267 billion (42% of all UK exports). UK imports from the EU were £292 billion (45% of all UK imports).
Detailed explanation-2: -Joining the EU membership raised the level of real GDP per person in the UK compared with the alternative of staying in EFTA. The deeper economic integration that EU membership entailed increased trade substantially and this had positive effects on income.
Detailed explanation-3: -The UK would revert to trading with the bloc of 27 member states on WTO terms, meaning that both the EU and UK would apply tariffs to trade between them. With no agreement on regulatory equivalence between the EU and UK, there would be no preferential access to the EU market for services.
Detailed explanation-4: -The UK’s trade deficit with the EU hit a record high of £32.9bn in the last quarter of 2023, according to Office for National Statistics (ONS) data released on Friday (13 February). This is the largest since records began in 1997, fuelled by a jump in imports from the EU.