Figure 12.3Market for British Pounds

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

Question

Figure 12.3Market for British Pounds
 
-Consider Figure 12.3.The market is initially governed by demand curve D0 and supply curve S0.Suppose US consumers develop stronger preferences for UK made goods,which supply and demand curves depict the new situation?

Quizplus · Accepted Answer

When US consumers develop stronger preferences for UK-made goods, the demand for these goods increases, shifting the demand curve from D0 to D2 while the supply curve remains at S0.