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Exchange Rates

Last updated Jun 30, 2023 Edit

An exchange rate is the price of one currency expressed in terms of another currency. The exchange rate determines how much of one currency has to be given up in order to buy a specific amount of another currency.

# Ways that exchange rates can impact business activity


Strong Pound Imports Cheaper Exports Dearer

# What might cause an increase in the exchange rate?

# Practice exercise 4

# What is an exchange rate?

# Explain how free exchange rates are determined.

# State and explain three reasons why a currency might increase in value

# Select one of the following statements to complete the sentence…

# When the exchange rate rises

# How might a firm ensure that its prices abroad do not rise?
# Why might a firm not always choose to take the above action?