Refer to the information provided in Figure 34.4 below to answer the question(s) that follow.
Figure 34.4Refer to Figure 34.4. The demand and supply of pounds are D2 and S1. A decrease in British demand for U.S. exports, ceteris paribus, could
A. increase the equilibrium quantity from 300 to 400 pounds.
B. decrease the exchange rate ($/pound) to $1.50.
C. increase the exchange rate ($/pound) to $2.00.
D. increase the demand for pounds from D2 to D1.
Answer: C
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