A strong pound enables what effect on the prices of UK-made products?

A strong pound enables what effect on the prices of UK-made products?

• A. Higher export prices.
• B. No change in prices.
• C. Lower domestic selling prices for UK-made products.
• D. Higher domestic selling prices.

Answer: (C)

When the pound strengthens, imports become cheaper. For UK manufacturers that rely on imported inputs, energy, or components, this lowers production costs. With lower costs, firms can reduce the prices of UK-made products in the domestic market or keep them from rising as quickly, making domestic goods more price-competitive for UK shoppers. So a strong pound tends to enable lower domestic selling prices for UK-made products.

When the pound strengthens, imports become cheaper. For UK manufacturers that rely on imported inputs, energy, or components, this lowers production costs. With lower costs, firms can reduce the prices of UK-made products in the domestic market or keep them from rising as quickly, making domestic goods more price-competitive for UK shoppers. So a strong pound tends to enable lower domestic selling prices for UK-made products.