Exchange Rates And Balance Of Payments

Question 1

When a British business imports somethings what must it pay the producer ?

Answer 1

In their own currency

Question 2

What are the three main parts of the balance of payments

Answer 2

Current accounts
Capital account
Financial account

Question 3

What is the current account made of ?

Answer 3

Imports
Exports
Invest revenue
Government transfers

Question 4

What importer is the uk ?

Answer 4

A net importer

Question 5

When value of one currency increases relative to another what happens to it ?

Answer 5

It’s strengths or appreciates

Question 6

What does spiced stand for ?

Answer 6

Strengthening pounds
Imports cheaper
Exports dearer

Question 7

What does wpidec stand for

Answer 7

Weakening pounds , imports dearer , exports cheaper

Question 8

Why is 1 pound = 2.5 euros stronger than it being = 2 euros

Answer 8

Pound has more value as you can buy more euros for less pounds

Question 9

Who buys sterling and ( sells sterling ) vice versa

Answer 9

Foreign firm importing from uk

Tourists coming into uk

Uk tourists returning home

Currency speculators

Foreign investors into uk financial system

Central banks

Question 10

Why might counter cyclical policies be used during a period of economic growth ?

Answer 10

To avoid big recessions