Assume that income levels in the United Kingdom start to rise, while U.S. income levels remain unchanged. This will place ____ pressure on the value of the British pound. Also, assume that U.S. interest rates rise, while British interest rates remain unchanged and that no inflation is expected in either country. This will place ____ pressure on the value of the British pound.

Question

Quizplus · Accepted Answer

When income levels in the UK rise, there will be an increased demand for British goods and services, which will lead to an increase in the value of the British pound. When US interest rates rise, there will be an increased demand for US dollars, which will lead to a decrease in the value of the British pound.

Assume That Income Levels in the United Kingdom Start to Rise