3.2.4

Question 1

what is an exchange rate?

Answer 1

the price of one currency expressed in terms of another

Question 2

what does an exchange rate impact?

Answer 2

it has an impact on the prices of exports and imports

Question 3

what is an export?

Answer 3

a good or service that is sold to another country

Question 4

what is an import?

Answer 4

a good or service bought from another country

Question 5

what does it mean when a currency is strengthened?

Answer 5

it rises

Question 6

what does it mean when a currency is weakened?

Answer 6

it falls

Question 7

what does strong pound mean?

Answer 7

you can buy more of another currency

Question 8

what does the acronyms SPICEE mean?

Answer 8

Strong
Pound
Imports
Cheap
Exports
Expensive

Question 9

what does weak pound mean?

Answer 9

you can buy less of another currency

Question 10

what does the acronyms WPIEEC mean?

Answer 10

Weak
Pound
Imports
Expensive
Exports
Cheap

Question 11

how does a fall in exchange rate impact export prices?

Answer 11

these will fall and therefore sales should increase, this should increases profits

Question 12

how does a fall in exchange rate impact import prices?

Answer 12

-these will rise, which might increase costs, and this might decrease profits
-therefore it will depend on how much a business exports and how much it imports