4. The equilibrium exchange rate of pounds is $1.70. At an exchange rate of $1.68 per pound:

a.	U.S. demand for pounds would exceed the supply of pounds for sale and there would be a shortage of pounds in the foreign exchange market.
b.	U.S. demand for pounds would be less than the supply of pounds for sale and there would be a shortage of pounds in the foreign exchange market.
c.	U.S. demand for pounds would exceed the supply of pounds for sale and there would be a surplus of pounds in the foreign exchange market.
d.	U.S. demand for pounds would be less than the supply of pounds for sale and there would be a surplus of pounds in the foreign exchange market.
e.	U.S. demand for pounds would be equal to the supply of pounds for sale and there would be a shortage of pounds in the foreign exchange market.

5. If U.S. inflation remains unchanged while European inflation stayed the same, there would be:

a.	an increased U.S. demand for euros and an increased supply of euros for sale.
b.	a decreased U.S. demand for euros and an increased supply of euros for sale.
c.	a decreased U.S. demand for euros and a decreased supply of euros for sale.
d.	an increased U.S. demand for euros and a decreased supply of euros for sale.
e.	No answer.

6. Any event that increases the supply of US dollar to be exchanged for British pound should result in a(n) ____ in the value of the pound with respect to ____, other things being equal.

a.	increase; dollar
b.	increase; non-dollar currencies
c.	decrease; non-dollar currencies
d.	decrease; British pound e. No answer