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 S2. An increase in British demand for U.S. exports, ceteris paribus, could
A. increase the exchange rate ($/pound) to $2.50.
B. increase the demand for pounds from D2 to D1.
C. decrease the exchange rate ($/pound) to $1.50.
D. decrease the equilibrium quantity from 400 to 300 pounds.
Answer: C
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