Exchange Rates Flashcards
1
Q
Exchange rate definition
A
The value of a currency in terms of another
2
Q
Strengthening exchange rate
A
This is when currency increases in value
Can buy more of a foreign currency
3
Q
Weakening exchange rate
A
A currency decreases in value
Can buy less of a foreign currency
4
Q
Imports
A
Money leaves the UK
5
Q
Exports
A
Money enters the UK
6
Q
Spiced Acronym
A
Strong Pound Imports Cheap Exports Dear
7
Q
What does a weakening pound mean for toms toys?
A
They would have to give up more £ to buy stock from the EU
Increase their costs
8
Q
What could toms toys do if the pound becomes weaker?
A
Import more from China as it is strengthening against the yuan
9
Q
Due to weakening pound, will all of toms toys costs increase?
A
No, only 30-40% of their costs are stock costs
Only 40% of these are from the EU
