Assume that currently one U.S. dollar will purchase £0.65. Investors believe that one year from now a U.S. dollar will purchase £0.72. If we consider the U.S. dollar-pound market, where the horizontal axis measure the quantity of pounds, explain what we are likely to see in terms of demand and supply and the exchange rate.
What will be an ideal response?
In this case, investors expect a deterioration of the British pound. In the pound-dollar market, we should see British investors supplying a greater amount of pounds at the current exchange rate, thus in the graph, the supply of pounds shifts to the right. This will cause the pound to depreciate relative to the dollar.
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A) open market sales. B) Social Security. C) consumption taxes. D) dividends.
Refer to Table 8-18. What is the GDP deflator in 2016 if 2016 is the base year?
A) 120 B) 118 C) 100 D) 87
Refer to Table 19-27. What is the level of personal income for this economy?
A) $1,140 billion B) $1,010 billion C) $990 billion D) $860 billion
An example of underutilization is producing
a. as many muffins and widescreen televisions as the economy is capable of making b. fewer muffins and widescreen televisions than the economy is capable of making c. more muffins and fewer widescreen televisions d. fewer muffins and more widescreen televisions