Question
The spot exchange rate between the dollar and the British pound is floating or flexible. What are the effects of each of the following events
The spot exchange rate between the dollar and the British pound is floating or flexible. What are the effects of each of the following events on this exchange rate? a) There is a large increase in British demand for US exports. b) There is a large increase in British demand for investments in US$-denominated financial assets. c) Political uncertainties in Europe have lead US investors to shift their financial investments out of Britain and back into the US. d) US demand for products imported from Britain falls significantly as bad press reports lead Americans to questions the quality of British products. e) Output of US increases temporarily. f) Interest rate of the UK falls temporarily
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