Asked by Hassan ibrahim on Jul 06, 2024
Verified
In a graph showing the market supply and demand for British pounds in terms of U.S. dollars, the supply-of-pounds curve is upsloping because
A) fewer British pounds can be purchased per dollar if U.S. dollars become more expensive.
B) fewer U.S. dollars can be purchased per pound if the British pounds become less expensive.
C) the British will purchase more U.S. goods or services when the dollar price of pounds rises.
D) the British will purchase more U.S. goods or services when the dollar price of pounds falls.
Supply-of-Pounds Curve
The supply-of-pounds curve represents the amount of British pounds that suppliers (like the British) are willing to provide at different exchange rate levels, often used in the context of Forex markets.
Upsloping
Referring to a line or curve that ascends or increases in height as it moves from left to right on a graph.
U.S. Dollars
The currency of the United States, widely used as a benchmark and reserve currency around the world.
- Discuss the interplay between currency supply and demand adjustments and their market value consequences.
Verified Answer
ZK
Zybrea KnightJul 07, 2024
Final Answer :
C
Explanation :
The supply-of-pounds curve is upsloping because as the value of the pound increases in terms of dollars (i.e., it takes more dollars to buy pounds), British consumers find U.S. goods and services cheaper in comparison to local options, leading them to purchase more from the U.S. This increases the supply of pounds in the foreign exchange market as they exchange pounds for dollars to make purchases.
Learning Objectives
- Discuss the interplay between currency supply and demand adjustments and their market value consequences.