1. Draw a graph showing the demand for pounds by citizens of the Euro Area. The x-axis should be quantity demanded, and the y-axis should be the exchange rate. Your y-axis should go from 1/ to 1.25/. (Note that you dont have enough information to draw an accurate graph, it should simply reflect the correct direction, i.e. upward or downward sloping)

2. On June 23, 2016, Britain voted to leave the European Union, an action that would likely impose greater barriers to trade between these regions. Draw a new curve above representing the change likely to result from this action. If no change occurred to the demand for euros by citizens of the U.K, what would happen to the relative value of these currencies?
3. As a result of the referendum, the pound declined sharply in value. Given your analysis above, what (if anything) can you say about what happened to the demand for euros by citizens of the U.K?