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 D₂ and S₁. A decrease in British demand for U.S. exports, ceteris paribus, could

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 D₂ and S₁. A decrease in British demand for U.S. exports, ceteris paribus, could

Quizplus · Accepted Answer

A decrease in British demand for U.S. exports would lead to a decrease in demand for dollars, and therefore a decrease in the exchange rate ($/pound), making the pound more expensive. This means that it would take more dollars to purchase one pound, resulting in an increase in the exchange rate ($/pound) to $2.00. Therefore, the correct answer is B. Choices A, C, and D are incorrect because they do not accurately reflect the effects of a decrease in British demand for U.S. exports.

Refer to the Information Provided in Figure 19