The figure given below depicts the foreign exchange market for British pounds traded for U.S. dollars.Figure 22.2

-The exchange rate affects the trade in goods and services between California and NewYork.

Question

The figure given below depicts the foreign exchange market for British pounds traded for U.S. dollars.Figure 22.2
 
-The exchange rate affects the trade in goods and services between California and NewYork.

Quizplus · Accepted Answer

The foreign exchange market for British pounds traded for U.S. dollars does not directly affect the trade in goods and services between California and New York as they are both part of the same country and use the same currency (U.S. dollar). However, an increase in the exchange rate between British pounds and U.S. dollars could indirectly affect the trade relationship between California and New York as it could impact the overall strength of the U.S. dollar and the competitiveness of U.S. exports.

The Figure Given Below Depicts the Foreign Exchange Market for British