Refer to the information provided in Figure 19.4 below to answer the questions that follow. Figure 19.4
-Refer to Figure 19.4. The demand and supply of pounds are D₁ and S₁. If the supply shifts to S₂ and demand remains unchanged at D₁

Question

Refer to the information provided in Figure 19.4 below to answer the questions that follow.

Figure 19.4
-Refer to Figure 19.4. The demand and supply of pounds are D₁ and S₁. If the supply shifts to S₂ and demand remains unchanged at D₁

Quizplus · Accepted Answer

When the supply curve shifts to the right, it means that more pounds are available at each possible exchange rate. Therefore, the pound will depreciate (as there is more supply) and the dollar will appreciate (as there is less demand). The equilibrium price will decrease and the equilibrium quantity of pounds will increase.

Refer to the Information Provided in Figure 19