$$\begin{array} { | c | c | c | }
\hline \text { (1) } & \text { (2) } & \text { (3) } \
\hline \begin{array} { c }
\text { Quantity of Libras } \
\text { Demanded (Billions) }
\end{array} & \begin{array} { c }
\text { Dollar Price } \
\text { of Libras }
\end{array} & \begin{array} { c }
\text { Quantity of Libras } \
\text { Supplied (Billions) }
\end{array} \
\hline 100 & \$ 5 & 325 \
\hline 200 & 4 & 200 \
\hline 300 & 3 & 100 \
\hline 400 & 2 & 75 \
\hline
\end{array}$$ The table indicates the dollar price of libras, the currency used in the hypothetical nation of Libra. Assume that a system of ?exible exchange rates is in place. Suppose that Libra decided to import
More U.S. products. We would expect the quantity of libras
A) demanded at each dollar price to rise and the dollar to depreciate relative to the libra.
B) demanded at each dollar price to fall and the dollar to appreciate relative to the libra.
C) supplied at each dollar price to rise and the dollar to appreciate relative to the libra.
D) supplied at each dollar price to fall and the dollar to depreciate relative to the libra.

Question

$$\begin{array} { | c | c | c | } 
\hline \text { (1) } & \text { (2) } & \text { (3) } \
\hline \begin{array} { c } 
\text { Quantity of Libras } \
\text { Demanded (Billions) }
\end{array} & \begin{array} { c } 
\text { Dollar Price } \
\text { of Libras }
\end{array} & \begin{array} { c } 
\text { Quantity of Libras } \
\text { Supplied (Billions) }
\end{array} \
\hline 100 & \$ 5 & 325 \
\hline 200 & 4 & 200 \
\hline 300 & 3 & 100 \
\hline 400 & 2 & 75 \
\hline
\end{array}$$ The table indicates the dollar price of libras, the currency used in the hypothetical nation of Libra. Assume that a system of ?exible exchange rates is in place. Suppose that Libra decided to import
More U.S. products. We would expect the quantity of libras
A) demanded at each dollar price to rise and the dollar to depreciate relative to the libra.
B) demanded at each dollar price to fall and the dollar to appreciate relative to the libra.
C) supplied at each dollar price to rise and the dollar to appreciate relative to the libra.
D) supplied at each dollar price to fall and the dollar to depreciate relative to the libra.

Quizplus · Accepted Answer

When Libra imports more U.S. products, it needs more dollars to pay for these imports. This leads to an increase in the quantity of libras supplied at each dollar price to exchange for dollars, causing the dollar to appreciate relative to the libra.

The Table Indicates the Dollar Price of Libras, the Currency