-In Exhibit FF-6, if the exchange rate of dollars per British pound fixed at 1.90, there would be a(n)
A) excess supply of pounds on the foreign exchange market
B) excess demand for pounds on the foreign exchange market
C) surplus of dollars on the foreign exchange market
D) trade deficit in the United States
E) trade surplus in Great Britain

Question

-In Exhibit FF-6, if the exchange rate of dollars per British pound fixed at 1.90, there would be a(n)
A) excess supply of pounds on the foreign exchange market 
B) excess demand for pounds on the foreign exchange market 
C) surplus of dollars on the foreign exchange market 
D) trade deficit in the United States 
E) trade surplus in Great Britain

Quizplus · Accepted Answer

If the exchange rate is fixed above the equilibrium rate, it results in an excess supply of pounds because more people want to sell pounds at this higher rate than there are buyers.

-In Exhibit FF-6, If the Exchange Rate of Dollars Per