Use the graph below to answer questions 9 - 12.
Figure 1.1
-Refer to Figure 1.1.Suppose that the market for British pound is initially in equilibrium at point A with the exchange rate $2.00 per pound.Which of the following could shift the demand for pound from D₁ to D₂?

Question

Use the graph below to answer questions 9 - 12.
Figure 1.1

-Refer to Figure 1.1.Suppose that the market for British pound is initially in equilibrium at point A with the exchange rate $2.00 per pound.Which of the following could shift the demand for pound from D₁ to D₂?

Quizplus · Accepted Answer

If Americans want to buy British goods more than before, it means there is an increase in demand for British goods. As a result, Americans will need to purchase more pounds to buy those goods, leading to an increase in the demand for pounds. This will shift the demand curve for pounds to the right from D₁ to D₂, causing an increase in the exchange rate (the price of pounds in terms of dollars).

Use the Graph Below to Answer Questions 9 - 12