Exchange Rates Flashcards
1
Q
What is an exchange rate?
A
The value of one currency expressed in terms of another currency
(e.g. pounds & euros).
2
Q
What happens when the value of the pound increases (‘Strong’ pound)
A
- 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 does SPICED stand for when remembering impact of exchange rates?
A
Strong Pound Imports Cheaper Exports Dearer
