Exchange rates SAQ

What is the effect on Eurozone exports to the UK when sterling weakens?

They become more expensive, reducing demand.

How does a weakening sterling affect UK exports to the Eurozone?

UK goods become cheaper, increasing demand.

Why does tourism from the UK to Ireland decline when sterling weakens?

It becomes more expensive for British tourists.

How does a weakening sterling influence tourism from Ireland to the UK?

It becomes cheaper for Irish tourists to visit the UK. Signup and view all the answers

What is the impact of a weakening sterling on cross-border shopping between Northern Ireland and the Republic of Ireland?

People in the Republic travel north to shop, harming local businesses. Signup and view all the answers

Define the exchange rate.

The price of one currency in terms of another. Signup and view all the answers

How does a weakening euro affect Eurozone exports to other countries?

Exports become cheaper, boosting demand and employment. Signup and view all the answers

What is the impact of a weakening euro on the cost of foreign imports in the Eurozone?

Imports become more expensive, increasing production costs. Signup and view all the answers

How does a weaker euro influence tourism to Ireland from foreign countries?

It increases tourism as it becomes cheaper for tourists. Signup and view all the answers

What happens to the cost of repaying external debt when the euro weakens

Repaying debt becomes more expensive. Signup and view all the answers

Explain how a weakening euro can lead to economic growth in the Eurozone.

Boosts exports and tourism, though can cause inflation. Signup and view all the answers

How does currency speculation affect exchange rates?

Buying and selling currencies for profit affects demand and supply. Signup and view all the answers

What is the effect of differing interest rates between the US and the Eurozone on exchange rates?

Higher US rates attract money from the Eurozone, affecting rates. Signup and view all the answers

Describe the impact of quantitative easing by the ECB on the supply and value of euros.

Increases euro supply, lowering its value. Signup and view all the answers

Why might goods from the UK become cheaper in Eurozone countries when sterling weakens?

Sterling devaluation makes UK goods cheaper. Signup and view all the answers

Explain why a weakening sterling might lead to an increase in demand for UK goods in the Eurozone.

Cheaper UK goods boost demand. Signup and view all the answers

How does a weakening sterling impact British tourists visiting Ireland?

Ireland becomes more expensive, reducing visits. Signup and view all the answers

What is the overall effect of a weakening sterling on Irish businesses near the border with Northern Ireland?

Decreases business in the Republic as shoppers head north Signup and view all the answers