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 S₂. If the demand shifts to D₁ and supply remains unchanged at S₂

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 S₂. If the demand shifts to D₁ and supply remains unchanged at S₂

Quizplus · Accepted Answer

The demand shift to D1 will increase the equilibrium quantity of pounds. Since the supply remains unchanged, the increase in demand will lead to a higher equilibrium price. A higher equilibrium price for pounds means that the dollar has depreciated.

Refer to the Information Provided in Figure 19