Refer to the information provided in Figure 34.4 below to answer the question(s) that follow.
Figure 34.4
-Refer to Figure 34.4. The demand and supply of pounds are D2 and S2. An increase in British demand for U.S. exports, ceteris paribus, could
A) increase the exchange rate ($/pound) to $2.50.
B) decrease the exchange rate ($/pound) to $1.50.
C) decrease the equilibrium quantity from 400 to 300 pounds.
D) increase the demand for pounds from D2 to D1.
Correct Answer:
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