Under freely flexible (floating) exchange rates, if the dollar price of pounds rises, the pound price of dollars will fall.

Question

Quizplus · Accepted Answer

Under freely flexible exchange rates, the exchange rate between two currencies is determined by the market forces of supply and demand. If the dollar price of pounds rises, it means that there is an increased demand for pounds in the market, which would lead to a fall in the pound price of dollars. This is because investors would need to pay more dollars to buy pounds, which would result in a decrease in the value of the dollar relative to the pound.

Under Freely Flexible (Floating) Exchange Rates, If the Dollar Price