Exchange rates Flashcards
1
Q
Exchange rate
A
The price of one currency in terms of another
2
Q
Currency supply
A
- Tourism abroad
- Imports
3
Q
Currency demand
A
- Domestic tourism
- Exports
4
Q
Appreciation
A
Increase in exchange rate
£1 - $1.15 to £1 - $1.30
5
Q
Depreciation
A
Decrease in exchange rate
£1 - $1.30 to £1 - $1.15
6
Q
Speculation
A
Speculation occurs when traders buy a currency in the expectation that it will be worth more in the short to medium term, to make a profit
7
Q
Appreciation - imports
A
Imports cheaper - fewer pounds needed to buy foreign imports
8
Q
Depreciation - imports
A
Imports expensive - more pounds needed to buy foreign imports
9
Q
Appreciation - exports
A
Exports more expensive - more foreign currency needed to buy exports
10
Q
Depreciation - exports
A
Exports cheaper - less foreign currency need to buy exports
