Under ﬂexible (ﬂoating) exchange rates, if the dollar price of pounds rises, the pound price of dollars
will fall.

Question

Quizplus · Accepted Answer

In a flexible exchange rate system, the exchange rate between two currencies changes based on market demand and supply. If the dollar price of pounds rises, it means that the market demand for pounds increased, and the supply of dollars decreased. As a result, the pound price of dollars will fall because the market supply of pounds will increase and the demand for dollars will increase.

Under ﬂExible (ﬂOating) Exchange Rates, If the Dollar Price of Pounds