ECONOMICS HELP (1 Viewer)

[J2good4u]

can someone explain how a depreciation leads to structural adjustment and greater competitiveness in industry-from tim riley

 

[will_]

a depreciation in the australian dollar reduces the cost of exporting relative to the australian dollar so australian exporters would be more competitive in the global economy.

 

[TrevorLuo]

Pretty much what Will said, but like the Australian Dollar is worth less compared to other countries and so the Australian goods will be cheaper (as their dollar is worth more) and therefore people overseas will be more inclined to buy Australian goods. Furthermore it leads to structural change because people will notice that they can make money doing this resources are reallocated into the sectors which can make money.