Exchange Rates Practice Test

Based on the exchange rate shown in the table (quoted as Japanese yen per 1 British pound), which statement correctly describes what happened to the pound and the purchasing power of UK residents traveling to Japan?

Exchange Rate: JPY per £1 (GBP)

• Year 1: 150 JPY per £1
• Year 2: 120 JPY per £1

Based on the exchange rate shown, assume South Korea is the domestic country and the exchange rate is quoted as Korean won per $1 U.S. The exchange rate changes from $1 = 2,000 KRW in Period 1 to $1 = 1,000 KRW in Period 2. Which statement correctly describes what happened to the won and one likely implication for South Korean exports to the United States (holding South Korean prices constant in won)?