For the British pound, exchange rate overshooting is explained by the long run supply schedule of pounds being more inelastic than the short run supply schedule of pounds.

Question

Quizplus · Accepted Answer

Exchange rate overshooting occurs because prices are sticky in the short run, making the demand for money and thus the exchange rate more volatile in response to changes in monetary policy or demand. It's not about the elasticity of the supply schedule of pounds.

For the British Pound, Exchange Rate Overshooting Is Explained by the Long