Figure 29-2
-Refer to Figure 29-2. Which of the events below cause the shifts in the supply and demand curves in the market for dollars against the British pound shown in the graph above?
A) Interest rates rise in England.
B) Interest rates rise in the United States.
C) Real income rises in the United States.
D) Real income falls in England.

Question

Figure 29-2 
-Refer to Figure 29-2. Which of the events below cause the shifts in the supply and demand curves in the market for dollars against the British pound shown in the graph above?
A) Interest rates rise in England. 
B) Interest rates rise in the United States. 
C) Real income rises in the United States. 
D) Real income falls in England.

Quizplus · Accepted Answer

An increase in interest rates in England would make British assets more attractive, increasing demand for pounds and decreasing demand for dollars, causing the supply curve for dollars to shift right and the demand curve for dollars to shift left.

Figure 29-2 -Refer to Figure 29-2. Which of the Events Below Cause