Answer all of the questions. Explain what will happen to the exchange rate from the following occurrences. Assume that the US dollar is the primary currency being analyzed and the Pound-Sterling is the other currency.

1)The Bank of England (its central bank) increases the supply of pounds.

2)Productivity growth in England is faster than American productivity growth.

3)People expect the US to go into a recession but not England. The central banks are doing nothing so far.

4)The Federal Reserve increases the money supply (which also decreases interest rates in the economy).

5)The US is growing faster than England (Hint: go through all possible causes of changes).

6)People think the US is going into a recession. However, so are all other countries and they believe their recessions (including England's) will be worse that the US's.