Use the figure below to answer the following question(s) .
Figure 18-2
-Figure 18-2 illustrates supply and demand for U.S.dollars and British pounds in the foreign exchange market.Which of the following would cause the demand for foreign exchange (pounds) to shift from D₁ to D₂?
A) an increase in the real interest rate in Britain relative to the United States
B) higher inflation in Britain than in the United States
C) higher income growth in Britain than in the United States
D) an increase in the number of British citizens vacationing in the United States
Correct Answer:
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