From June until the end of July 2016, the UK pound sterling fell in value by 11% against a basket of currencies used by the UK’s main trading partners. The diagram illustrates the initial aggregate demand curve $AD_1$ and the initial aggregate supply curve $AS_1$ for the UK economy before June 2016. The equilibrium is at X. What would the new equilibrium have been for the UK economy as a result of the depreciation of the pound sterling?
Economics 9708 · AS & A Level · Aggregate demand and aggregate supply