BoP Question

I believe in the first case there will be an injection of money in the UK economy and this will definitely affect the level of consumer spending. It will therefore trigger a multiplier effect affecting aggregate expenditure and national imcome......The payment will be made in pounds sterling and therefore the demand for pound will rise appreciating the exchange rate of the pound against the Korean currency and surely the impact will be expensive UK goods in Korea.
back to the original question the injection of money will be recorded in the capital acccount of the balance of payment and it will be an external revenue and it will reduce the level of deficit in the UK balance of payment. However folloing this if the Korean buyer make huge profit in the business in UK and the money sent back to Korea the outflow will increase and may lead to further deficit.
thus i believe the extent of the impact ill surely depend on how the UK government will make the deal and agreement about the outflow of the currency.

I believe in the first case there will be an injection of money in the UK economy and this will definitely affect the level of consumer spending. It will therefore trigger a multiplier effect affecting aggregate expenditure and national imcome......The payment will be made in pounds sterling and therefore the demand for pound will rise appreciating the exchange rate of the pound against the Korean currency and surely the impact will be expensive UK goods in Korea.
back to the original question the injection of money will be recorded in the capital acccount of the balance of payment and it will be an external revenue and it will reduce the level of deficit in the UK balance of payment. However folloing this if the Korean buyer make huge profit in the business in UK and the money sent back to Korea the outflow will increase and may lead to further deficit.
thus i believe the extent of the impact ill surely depend on how the UK government will make the deal and agreement about the outflow of the currency.

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