Assume that the British government eliminates all controls on imports by British companies. Other things being equal, the U.S. demand for pounds would ____, the supply of pounds for sale would ____, and the equilibrium value of the pound would ____.
A) increase; increase; increase
B) decrease; increase; decrease
C) remain unchanged; increase; decrease
D) remain unchanged; increase; increase

Question

​Assume that the British government eliminates all controls on imports by British companies. Other things being equal, the U.S. demand for pounds would ____, the supply of pounds for sale would ____, and the equilibrium value of the pound would ____.
A) ​increase; increase; increase
B) ​decrease; increase; decrease
C) ​remain unchanged; increase; decrease
D) ​remain unchanged; increase; increase

Quizplus · Accepted Answer

If the British government eliminates all controls on imports, British companies may import more goods, increasing the supply of pounds as they exchange pounds for foreign currency. This would lead to a decrease in the equilibrium value of the pound. The U.S. demand for pounds would remain unchanged as this scenario primarily affects the supply side.

​Assume That the British Government Eliminates All Controls on Imports

Assume That the British Government Eliminates All Controls on Imports