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Exchange Rate (2) - Coggle Diagram

- - - - This should increase the quantity of products demanded from abroad
        
        UK businesses need to be ready and able to export more
        
        Help stimulate economic growth within the UK & help employment
  - - - & lead to higher returns for investigators
      - If pound increases in value & kept the same, foreign curriency is now higher which is likely to reduce sales
        
        Business might keep the same abroad which would reduce profit margins
  - - - If the business buys and the £ strengthens this will reduce the import costs
        
        Lead to higher profit margins/enable the firm to reduce its prices
        
        Strong £ also means customers can buy abroad for cheaper, which will reduce UK business domestic sales.
- - - - given the different spending patterns of different countries, agreeing on what is in the basket can be difficult
- - - - likely to reduce demand as higher costs of borrowing