Question
1. Draw a graph of the exchange market for US Dollars relative to British Pounds. Suppose the current exchange rate is .5 pounds = 1
1. Draw a graph of the exchange market for US Dollars relative to British Pounds. Suppose the current exchange rate is .5 pounds = 1 dollar.
2. Suppose in response to our love of a new British TV show, Americans suddenly wish to purchase lots more British made goods. Demonstrate graphically what will happen to the graph you drew in answer to question 1 above. Will the Dollar appreciate or depreciate relative to the pound?
3. Suppose that British citizens, in response to the United States having higher interest rates than in England, convert their pounds into dollars to deposit into US banks. Demonstrate graphically what will happen to the graph you drew in answer to question 1 above. Will the Dollar appreciate or depreciate relative to the pound?
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Microeconomics Principles For A Changing World
Authors: Eric Chiang
4th Edition
1464186677, 978-1464186677
