Recently the British Pound suffered an unexpected depreciation in value. Which of the following actions being considered by Coventry Furniture of London, a purely domestic furniture manufacturer and retailer, would be considered a highly unlikely response to the depreciation of the pound?
A) Coventry might choose to maintain its domestic sales prices constant in pound terms.
B) Coventry might try to raise domestic prices because competing imports are now priced higher in England.
C) Coventry might try to lower domestic prices because competing imports are now priced higher in England.
D) none of the above

Question

Quizplus · Accepted Answer

Lowering domestic prices would be unlikely because the depreciation of the pound makes imports more expensive, reducing competition from foreign products. Coventry would more likely maintain or increase prices to capitalize on the reduced competition.

Recently the British Pound Suffered an Unexpected Depreciation in Value