If the supply of U.S. dollars in Britain increases, then all of the following occurs EXCEPT that:

Question

Quizplus · Accepted Answer

If the supply of U.S. dollars in Britain increases, the demand for the pound sterling decreases, causing the pound to appreciate against the dollar. This would lead to a decrease in the dollar price of the pound, meaning fewer dollars can buy the same amount of pounds. As a result, the dollar depreciates against the pound, not appreciates. Therefore, choice A is incorrect. The correct answer is D because the dollar depreciates, rather than appreciates.

If the Supply of U