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

-Other things equal, an appreciation of the Algerian dinar in relation to the euro will act to increase Algerian demand for European goods and to decrease European demand for Algerian goods.

Question

The figure given below depicts the foreign exchange market for British pounds traded for U.S. dollars.Figure 22.2
 
-Other things equal, an appreciation of the Algerian dinar in relation to the euro will act to increase Algerian demand for European goods and to decrease European demand for Algerian goods.

Quizplus · Accepted Answer

An appreciation of the Algerian dinar in relation to the euro means that the Algerian dinar has become stronger compared to the euro. This means that Algerian goods have become relatively more expensive for Europeans, while European goods have become relatively cheaper for Algerians. Therefore, Algerian demand for European goods is likely to increase, while European demand for Algerian goods is likely to decrease.

The Figure Given Below Depicts the Foreign Exchange Market for British