If the price of a car in the United States is $26,000, and the exchange rate between the dollar and the British pound rises from $1.50 to $2.00 per pound, then the price of the American car in Britain will

Question

Quizplus · Accepted Answer

When the exchange rate rises from $1.50 to $2.00 per pound, it means that fewer pounds are needed to buy the same amount of dollars. Therefore, the price of the American car in Britain, when converted to pounds, will fall because it costs fewer pounds to buy the car at $26,000.

If the Price of a Car in the United States