The equilibrium price for a British pound is $1.60. At a price of $1.55 per British pound, there would be excess __________ the dollar and the dollar would __________.
A) supply of; appreciate
B) supply of; depreciate
C) demand for; appreciate
D) demand for; depreciate

Question

Quizplus · Accepted Answer

At a price of $1.55 per British pound, the pound would be cheaper, leading to an increase in demand for it. This would result in a larger supply of dollars in the market, which would decrease the value (or depreciate) the dollar. Therefore, choice B is the correct answer.

The Equilibrium Price for a British Pound Is $1