SPICED is a currency mnemonic describing the effects of a strong pound. Which statement is true?

• A. Imports cheap; Exports dear
• B. Imports dear; Exports cheap
• C. Imports cheap; Exports cheap
• D. Imports dear; Exports dear

Answer: (A)

A strong pound makes imports cheaper and exports dearer. When the pound is strong, it buys more foreign currency, so goods from abroad priced in that currency cost UK buyers fewer pounds. Meanwhile, UK-made goods become more expensive for buyers in other countries because they must exchange more of their currency to buy pounds. That combination means imports are cheap while exports are dear. This is the situation the SPICED mnemonic helps you remember: a Strong Pound reduces import prices and raises export prices. If the pound were weaker, imports would be dear and exports cheaper.