Exchange Rates Flashcards
1
Q
What is exchange rate?
A
The value of one currency expressed in terms of another currency (e.g. pounds & euros).
2
Q
CALCULATIONS WITH EXCHANGE RATES (e.g. £1 = 1.20 euros
A
To change from pounds to euros:
➢ multiply the amount of pounds by the exchange rate (e.g. £10 x 1.20 = 12 euros) To change from euros to pounds:
➢ divide the amount of euros by the exchange rate (e.g. 12 euros ÷ 1.20 = £10)
If the value of the pound increases (a ‘strong’ pound):
• Bad news for UK businesses that are exporting to other countries, as their goods
become more expensive in those countries, so demand decreases.
• Good news for UK businesses that are importing from other countries, as those goods
become cheaper for the UK businesses
3
Q
What is SPICED?
A
S-Strong P-Pound I-Imports C-Cheaper E-Exports D-Dearer
