Figure 12.3 Market for British Pounds

-Consider Figure 12.3.The market is initially governed by demand curve D₀ and supply curve S₀.Suppose the US government raises tariffs for UK made goods, which supply and demand curves depict the new situation?

Question

Figure 12.3 Market for British Pounds

-Consider Figure 12.3.The market is initially governed by demand curve D₀ and supply curve S₀.Suppose the US government raises tariffs for UK made goods, which supply and demand curves depict the new situation?

Quizplus · Accepted Answer

Raising tariffs on UK made goods would make these goods more expensive in the US market, which would decrease their supply (no change in the supply curve since the question implies the initial supply curve remains) and shift the demand curve leftward (indicating a decrease in demand for the now more expensive UK goods).