Which of the following statements regarding the market for foreign currency exchange is true? An increase in UK net exports:
A) Decreases the supply of pounds and the pound depreciates.
B) Increases the demand for pounds and the pound appreciates.
C) Increases the supply of pounds and the pound depreciates.
D) Decreases the demand for pounds and the pound appreciates.

Question

Quizplus · Accepted Answer

An increase in UK net exports means there is a higher demand for UK goods and services from foreign countries. This leads to an increase in demand for pounds, which appreciates the currency. Therefore, option B is the correct answer.

Which of the Following Statements Regarding the Market for Foreign