Exchange Rates Flashcards
1
Q
Exchange Rates
A
An exchange rate tells us the price of one currency in terms of another.
2
Q
Currency Supply
A
Supply of a currency is determined by speculation, tourism abroad and imports.
3
Q
Currency Demand
A
Demand for a currency is determined by speculation, domestic tourism and exports.
4
Q
Exchange Rate Appreciation
A
The value of the currency increases (gets stronger).
5
Q
Exchange Rate Depreciation
A
The value of the currency decreases (gets weaker).
6
Q
Effect of Appreciation
A
Strong pound means imports get cheaper and exports get more expensive (SPICEE).
7
Q
Effect of Depreciation
A
Weak pound means imports get more expensive and exports get cheaper.
