Currency
Medium of exchange; money of country.
Formula
Exchange Rate = Units of Foreign Currency per £1
Real World
When the pound fell sharply after the Brexit referendum in 2016, UK importers like Tesco faced higher costs buying goods priced in euros or dollars, squeezing profit margins overnight.
Exam Focus
Always state the direction of exchange rate change and its effect on import/export costs separately — examiners award marks for this distinction.
How well did you know this?