Exchange rates (7.5)

Definition of Exchange rates

The value of one currency expressed in terms of another currency

What is a ‘slump’?

a significant decline in GDP for a long period of time

What is a ‘recession’?

A decline in GDP, going to negative numbers

What is ‘recovery’?

When economic growth is increasing and recovering from a decline. (it can still be negative)

what is a ‘boom’?

a significant incline in GDP for an extended period of time

What does ‘SPICED’ stand for?

Strong

Pound

Imports

Cheap

Exports

Dear

One positive and one negative of a strong exchange rate

Positive- Stock importing becomes cheaper

Negative- Exports become expensive

One positive and one negative of a weak exchange rate

Positive- Exports becomes cheaper

Negative- Stock imports become expensive

What is ‘SPICED’ good for?

Importing goods as the pound is strong because of the exchange rate

One negative of ‘SPICED’

Exports sell for less or have lower profit margins