Influences On Business Flashcards
What is an exchange rate?
The price of one currency expressed in terms of another
Exchange rates are important to businesses that engage in international trade.
What is the impact of rise in the exchange rate?
Fewer pounds are needed to purchase goods and services from other countries. As a result, products IMPORTED from other countries become cheaper.
However, more units of foreign currency have to be exchanged for each pound. This makes UK EXPORTS overseas more expensive. As a result, export sales are likely to decline
What is the impact of fall in the exchange rate?
Imports to the UK become more expensive as more pounds are required to buy a unit of the foreign currency
However, UK exports become cheaper as fewer units of foreign currency are required to buy them
A rise or fall in the exchange rate can affect the sales and profits of most businesses.
What are the effects on a business’ sales?
What are the effects of a rise or fall in exchange rates on a business’ profit?
