relative exchange rates

• What does the exchange rate affect between countries?

  The relative prices of goods
• How do prices influence consumer behavior?

  Prices determine whether consumers buy goods
• What is the impact of a change in price on trade?

  It affects the pattern of trade
• What is argued to be the reason for the UK's trade deficit with Europe?

  The strength of the pound
• Why has China kept their currency weak?

  To increase their trade surplus
• How does a weak currency affect exports?

  It makes exports more competitive