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Econ 4th Edition by William McEachern
Edition 4ISBN: 978-1285423548Econ 4th Edition by William McEachern
Edition 4ISBN: 978-1285423548 Exercise 3
DETERMINING THE EXCHANGE RATE Use these data to answer the following questions about the market for British pounds: 
a. Draw the demand and supply curves for pounds, and determine the equilibrium exchange rate (dollars per pound).
b. Suppose that the supply of pounds doubles. Draw the new supply curve.
c. What is the new equilibrium exchange rate?
d. Has the dollar appreciated or depreciated?
e. What happens to U.S. imports of British goods?
a. Draw the demand and supply curves for pounds, and determine the equilibrium exchange rate (dollars per pound).
b. Suppose that the supply of pounds doubles. Draw the new supply curve.
c. What is the new equilibrium exchange rate?
d. Has the dollar appreciated or depreciated?
e. What happens to U.S. imports of British goods?
Explanation
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a. Equilibrium price of pound:
In Figur...
Econ 4th Edition by William McEachern
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