The answer is True. Currently 2$ = 1 pound. The $/pound "exchange rate" is >1
The pound/$ exchange rate is <1.
You often see it expressed both ways.
but does it also depend on the goods in both countries? If a basket of goods is more expensive in UK, and less expensive in US, then the purchasing power of pound is not necessarily greater, is it?
I think false. The exchange rate generally equalizes purchasing power. That said, let me give an example. Say the exchange rate is $2=L1. (L for pounds). Now say a burger in the U.S. costs $2 and a similar burger in the U.K. costs L1. Here purchasing powers are the same. But the burger in the U.K. could cost L.9 or say, L1.1
You're correct! If the exchange rate between dollars and pounds is greater than 1 (for example, $1 = £1.5), it means that the pound is stronger or has more purchasing power than the dollar. In this case, each pound can buy more dollars, which means you would get more for your money when converting pounds to dollars. So, a higher exchange rate indicates that the pound has a greater purchasing power than the dollar. Therefore, the statement "Pound's purchasing power is greater than Dollar's if Exchange rate $/pounds > 1" is true.
