Santa Ana Company, a U.S. company, purchased merchandise on account from a company in England. The price was 1,000 British pounds. At the time of the purchase, the exchange rate for a British pound was $1.52. At the time Santa Ana Company paid for the merchandise, the exchange rate for a British pound was $1.55. What can be said about the pound relative to the U.S. dollar?

Question

Quizplus · Accepted Answer

The pound strengthened relative to the U.S. dollar because the exchange rate increased from $1.52 to $1.55 per pound, meaning it took more U.S. dollars to purchase one pound.