If the dollar depreciates relative to the pound, then the pound:
A)will be less expensive to Canadians.
B)may either appreciate or depreciate relative to the dollar.
C)will appreciate relative to the dollar.
D)will depreciate relative to the dollar.

Question

Quizplus · Accepted Answer

If the dollar depreciates relative to the pound, it means that it takes more dollars to buy one pound. This causes an increase in the demand for pounds, which leads to an appreciation of the pound relative to the dollar. Therefore, the pound will appreciate relative to the dollar.

If the Dollar Depreciates Relative to the Pound, Then the Pound