If the euro/U.S.$ exchange rate is 1.1€/U.S.$ in New York but 1.05€/U.S.$ in London, we should see:
A) people selling U.S.dollars and buying euros in New York and then selling those euros and buying $'s in London.
B) people selling euros and buying $'s in New York and then buying euros by selling $'s in London.
C) the price differential between the markets increase as people seek to take advantage of the situation.
D) the $ should appreciate in New York relative to the euro.
Correct Answer:
Verified
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