If the dollar-per-pound exchange rate decreases,
A) British goods become more expensive to the British.
B) British goods become more expensive to Americans.
C) British goods become less expensive to Americans.
D) British goods become less expensive to Europeans.
E) none of the above.

Question

Quizplus · Accepted Answer

If the dollar-per-pound exchange rate decreases, it means that the pound has strengthened relative to the dollar. As a result, British goods become less expensive for Americans because they can buy more pounds with a dollar than before, making British goods cheaper for them. Option A would have been correct if the pound-per-dollar exchange rate had decreased instead. Option B and D are incorrect because they are the opposite of the correct answer.

If the Dollar-Per-Pound Exchange Rate Decreases