The figure below illustrates the market for British pounds. D£ and S£ are the nonofficial demand and supply curves of the British pounds, respectively.
If the exchange rate is pegged at $2.50 per pound
A. the pound will be overvalued.
B. the British goods will become cheap in U.S. markets.
C. the pound will be undervalued.
D. the demand for American goods will fall in British markets.
Answer: A
You might also like to view...
When the price of a commodity falls, we can expect
A. total utility will fall. B. marginal utility of the last unit purchased will fall. C. marginal utility of the last unit purchased will rise. D. purchases will fall because of a change in marginal utility.
In the United States in 2012, the number of new, diagnosed diabetes cases was lowest for people in the age range of ________, and the rate of new diabetes cases per 1,000 people was lowest for people in the age range of ________
A) 65 and older; 20-44 B) 20-44; 20-44 C) 45-64; 65 and older D) 45-64; 45-64
If you purchase a $100,000 interest-rate futures contract for 105, and the price of the Treasury securities on the expiration date is 108, your ________ is ________
A) profit; $3000 B) loss; $3000 C) profit; $8000 D) loss; $8000
If resale price maintenance leads to a shift in the market supply that exceeds the shift in the market demand, the quantity of the good sold will ________ and the manufacturer's profit will ________.
A) decrease; decrease B) decrease; increase C) increase; decrease D) increase; increase