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The Graph Shows the Supply and Demand Curves for Dollars

Question 51

Multiple Choice

The graph shows the supply and demand curves for dollars in the pound/dollar market. Assume that D1 and S1 are the initial demand for and supply of dollars. Now suppose that Great Britain increases Its imports of American products. Assuming freely floating exchange rates, A) the pound price of dollars will fall to 1/5 pound equals $1. B) the pound price of dollars will rise to 1/4 pound equals $1. C) the dollar price of pounds will increase to $5 equals 1 pound. D) a dollar shortage of MN will result in Britain. The graph shows the supply and demand curves for dollars in the pound/dollar market. Assume that D1 and S1 are the initial demand for and supply of dollars. Now suppose that Great Britain increases
Its imports of American products. Assuming freely floating exchange rates,


A) the pound price of dollars will fall to 1/5 pound equals $1.
B) the pound price of dollars will rise to 1/4 pound equals $1.
C) the dollar price of pounds will increase to $5 equals 1 pound.
D) a dollar shortage of MN will result in Britain.

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