Figure 19.1
-Refer to Figure 19.1.Which of the following events causes the shifts in the supply and demand curves in the market for dollars against the British pound shown in the graph above?

Question

Figure 19.1 
-Refer to Figure 19.1.Which of the following events causes the shifts in the supply and demand curves in the market for dollars against the British pound shown in the graph above?

Quizplus · Accepted Answer

An increase in interest rates in England would make deposits in British banks more attractive, leading to an increase in demand for British pounds and a decrease in supply of British pounds in the foreign exchange market, causing a shift to the left in the supply curve and a shift to the right in the demand curve for British pounds. This would lead to an appreciation of the British pound against the US dollar. None of the other events listed would directly affect the supply and demand for British pounds in the foreign exchange market.

Figure 19.1 -Refer to Figure 19.1.Which of the Following Events Causes the Events