Suppose that Great Britain and the United States are trading partners. Assume that the initial exchange rate in Great Britain is £0.76= 1$. Now suppose that the opportunity cost of consumption in the United States begin to rise. Which of the following explain what is expected to happen in the British forex market? O The demand for British pounds will decrease, leading to a depreciation of the US dollar. O The supply of British pounds will increase, leading to an appreciation of the British pound. O The supply of American dollars will decrease, leading to a depreciation of the British pound. O The demand for American dollars will decrease, leading to an appreciation of the British pound.
Suppose that Great Britain and the United States are trading partners. Assume that the initial exchange rate in Great Britain is £0.76= 1$. Now suppose that the opportunity cost of consumption in the United States begin to rise. Which of the following explain what is expected to happen in the British forex market? O The demand for British pounds will decrease, leading to a depreciation of the US dollar. O The supply of British pounds will increase, leading to an appreciation of the British pound. O The supply of American dollars will decrease, leading to a depreciation of the British pound. O The demand for American dollars will decrease, leading to an appreciation of the British pound.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Suppose that Great Britain and the United States are trading partners. Assume that the initial exchange rate in Great Britain is £0.76= 1$. Now
suppose that the opportunity cost of consumption in the United States begin to rise. Which of the following explain what is expected to happen in the
British forex market?
O The demand for British pounds will decrease, leading to a depreciation of the US dollar.
O The supply of British pounds will increase, leading to an appreciation of the British pound.
O The supply of American dollars will decrease, leading to a depreciation of the British pound.
O The demand for American dollars will decrease, leading to an appreciation of the British pound.
Please do fast ASAP fast
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