If there is a recession in the United Kingdom and a reduction in British imports, and an economic boom in the United States and an increase in U.S. imports, then these events are most likely to
Cause the British pound to
A) appreciate and the U.S. dollar to appreciate.
B) depreciate and the U.S. dollar to depreciate.
C) appreciate and the U.S. dollar to depreciate.
D) depreciate and the U.S. dollar to appreciate.

Question

Quizplus · Accepted Answer

When there is a recession in the United Kingdom, there will be a decrease in demand for British goods and services, which will lead to a decrease in the value of the British pound. At the same time, when there is an economic boom in the United States, there will be an increase in demand for U.S. goods and services, which will lead to an increase in the value of the U.S. dollar.

If There Is a Recession in the United Kingdom and a Reduction