Exchange Rates Flashcards

All 7 cards in this deck

What does the exchange rate $£1 = €1.15$ mean as a ratio?

pounds : euros $= 1 : 1.15$, so the two amounts are in direct proportion (equal ratios).

How do you convert an amount of pounds into a foreign currency using a given exchange rate?

e.g. convert £40 when $£1 = €1.15$

Multiply by the rate.
$40 \times 1.15 = €46$

How do you convert an amount of foreign currency back into pounds using a given exchange rate?

e.g. convert €69 when $£1 = €1.15$

Divide by the rate.
$69 \div 1.15 = £60$

True or false? To change euros into pounds when $£1 = €1.15$, you multiply the number of euros by $1.15$.

False. You divide by $1.15$; you multiply only when going from pounds to euros.

What are the steps to convert between two currencies using two exchange rates with pounds?

e.g. convert $60 into yen when $£1 = \$1.20$ and $£1 = ¥150$

1. Convert to pounds by dividing: $60 \div 1.20 = £50$
2. Convert from pounds by multiplying: $50 \times 150 = ¥7500$

What are the steps to compare a foreign fuel price per litre with a UK price per gallon?

e.g. abroad €1.20 per litre, UK £5.00 per gallon, $£1 = €1.20$, 1 gallon $= 4.5$ litres

1. Convert the foreign price to pounds: $€1.20 \div 1.20 = £1$ per litre.
2. Convert to the same unit: $£1 \times 4.5 = £4.50$ per gallon.
3. Compare in the same currency and unit: £4.50 < £5.00, so the fuel abroad is cheaper.

True or false? If petrol abroad costs fewer euros per litre than the number of pounds per gallon in the UK, the petrol abroad must be cheaper.

False. Prices can only be compared once both are in the same currency and per the same unit.