Exchange rate multiple choice

If the exchange rate between the pound sterling (GBP) and the euro (EUR) strengthens from 1 GBP = 1.2 EUR to 1 GBP = 1.5 EUR, what will happen to the cost of importing goods from the Eurozone?

• The cost will decrease

• The cost will increase

• The cost will remain the same

• It depends on the specific goods being imported

A UK retailer plans to import furniture from the United States. The total cost of the furniture is $5,000. If the current exchange rate is 1 GBP = 1.4 USD, how much will the furniture cost in pounds?

• £2,500

• £3,500

• £3,571

• £5,000

A British tourist exchanges £500 for Japanese yen (JPY) at an exchange rate of 1 GBP = 150 JPY. How many yen will the tourist receive?

• 75,000 JPY

• 125,000 JPY

• 250,000 JPY

• 300,000 JPY

A UK-based exporter sells goods to Australia. The total revenue from the sale is AUD 10,000. If the current exchange rate is 1 GBP = 2 AUD, how much revenue will the exporter receive in pounds?

• £5,000

• £5,500

• £20,000

• £15,000

An increase in the exchange rate between the pound sterling (GBP) and the Indian rupee (INR) from 1 GBP = 90 INR to 1 GBP = 100 INR will result in:

• Increased cost for UK imports from India

• Decreased cost for UK imports from India

• No impact on the cost of UK imports from India