A short-run appreciation of the British pound would be consistent with:
A) a temporary fall in the British money supply.
B) a temporary fall in the European money supply.
C) a permanent rise in the European money supply.
D) either a temporary fall in the British money supply or a temporary rise in the European money supply.

Question

Quizplus · Accepted Answer

A short-run appreciation of the British pound could be caused by either a temporary fall in the British money supply (as this would increase the value of the pound relative to other currencies) or a temporary rise in the European money supply (as this would decrease the value of the euro relative to other currencies, including the pound). A permanent rise in the European money supply would likely lead to a long-term depreciation of the pound, not an appreciation.

A Short-Run Appreciation of the British Pound Would Be Consistent