When the exchange rate for the British pound changes from $1.80 per pound to $1.60 per pound, then, holding everything else constant, the pound has ________ and ________ expensive.

Question

Quizplus · Accepted Answer

The pound has depreciated because it now buys fewer dollars ($1.60 instead of $1.80). This makes American wheat more expensive in Britain as it costs more pounds to buy the same amount of dollars.

When the Exchange Rate for the British Pound Changes from $1.80