2.5.1 ECONOMIC INFLUENCES (EXCHANGE RATES) Flashcards
1
Q
what is an exchange rate
A
the value of one currency against another
2
Q
whats a depreciating exchange rate
A
when there has been a fall in the value of say sterling against dollar (1 pound can now buy less in dollars)
3
Q
whats an appreciating exchange rate
A
means there has been a rise in the value of say sterling against the dollar meaning we can buy more dollars for our pounds
4
Q
SPICED meaning
A
Strong
Pound
Imports
Cheaper
Exports
Dearer
5
Q
WPIDEC meaning
A
Weak
Pound
Imports
Dearer
Exports
Cheaper
6
Q
impacts of a weak pound
A
- exports become cheaper
- tourism increases
- imports become expensive
- risk of inflation
- uk competitiveness weakens
7
Q
impacts of a strong pound
A
- imports become cheaper
- tourism decreases
- exports become expensive
- lower inflation
- uk competitiveness improves
