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Must learn: the concept of exchange rates & how to calculate exchange rates Should learn: how exchange rates work and how they affect businesses and consumers Could learn: the impact of exchange rates on imports and exports
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Sam wants to download some music from the Internet. He has spent a long time researching and has found three companies who seem to offer the best deals. One is based in the UK, one in the USA and one in Germany. These are the prices they are charging for registration: ◦ Tunes unlimited [UK company] - £30 ◦ EZiest download [USA company] - $50 ◦ Musikwik [German company] - €50 He found out that the exchange rates were: £1 = $1.85 £1 = €1.45 Which would be the best deal for Sam?
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Sam wants to download some music from the Internet. He has spent a long time researching and has found three companies who seem to offer the best deals. One is based in the UK, one in the USA and one in Germany. These are the prices they are charging for registration: Tunes unlimited [UK company] - £30 EZiest download [USA company] - $50 = 50/1.85 = £27.03 Musikwik [German company] - €50 He found out that the exchange rates were: £1 = $1.85 £1 = €1.45 Which would be the best deal for Sam?
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Sam wants to download some music from the Internet. He has spent a long time researching and has found three companies who seem to offer the best deals. One is based in the UK, one in the USA and one in Germany. These are the prices they are charging for registration: Tunes unlimited [UK company] - £30 EZiest download [USA company] - $50 = 50/1.85 = £27.03 Musikwik [German company] - €50 = 50/1.45 = £34.48 He found out that the exchange rates were: £1 = $1.85 £1 = €1.45 Which would be the best deal for Sam?
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Sam wants to download some music from the Internet. He has spent a long time researching and has found three companies who seem to offer the best deals. One is based in the UK, one in the USA and one in Germany. These are the prices they are charging for registration: Tunes unlimited [UK company] - £30 EZiest download [USA company] - $50 = 50/1.85 = £27.03 Musikwik [German company] - €50 = 50/1.45 = £34.48 He found out that the exchange rates were: £1 = $1.85 £1 = €1.45 Which would be the best deal for Sam?
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Sell UK export businesses want paying in pounds. Foreign customers will therefore have to change their currency into pounds to make the payment. Buy UK import businesses have to change pounds into foreign currencies to buy from suppliers
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Broom House Farm sells sheep to a variety of different European countries. An average size sheep recently sold at the World Famous Otley Auction market for £50. How much would the sheep sell for in the European Union if the exchange rate was : £1 = 1.1 Euro £1 = 1.2 Euros £1 = 1.28 Euros To change pounds into another currency, multiply by the rate. E.g. at £1 = €1.48, £50 changed into Euro would be 50 x 1.48 = €74.
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What could happen to demand for Broom House Farms sheep if the exchange rate increases? For exporters, rising exchange rates may lead to a fall in the demand for their products and make it much harder for them to be able to compete in foreign markets.
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https://www.ec b.europa.eu/st ats/exchange/ eurofxref/html /eurofxref- graph- gbp.en.html https://www.ec b.europa.eu/st ats/exchange/ eurofxref/html /eurofxref- graph- gbp.en.html
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Task: Explain the meaning of the euro. Describe the trend in exchange rate of the euro in recent years. Analyse the effects of these changes on Broom House Farm? For each one don’t forget to Point Explain Effect Use the following to help: http://news.bbc.co.uk/cbbcnews/hi/find_out/guides/world/the _euro/newsid_1716000/1716198.stm http://www.bbc.co.uk/learningzone/clips/the-euro/8575.html
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