Scenario 1 The United States' economy is growing at a faster rate than the economy of its trading partner, the United Kingdom. As a result, the rate of American inflation is increasing. A. Draw correctly labeled graphs to show how the increase in inflation will affect the supply of the U.S. dollar and demand for the British pound in the foreign exchange market. B. Based on the scenario, what will happen to the value of the U.S. dollar? Explain. (Make sure you use the costs of foreign and domestic goods in your explanation.) The US. dollar will depreciation. Because as the rate of American inflation increase, more us dollar needed to buy the same goods, as the price of domestic goods increase, the price for foreign goods increase