Question 1
Refer to the information provided in Figure 34.4 below to answer the question(s) that follow.
Refer to Figure 34.4. The demand and supply of pounds are
S
2 and
D
2. Which of the following can change the equilibrium exchange rate ($/pound) to $1.50 and the equilibrium quantity to 400 pounds?
◦ British purchases of U.S.-made cars increase
◦ United States purchases of British-made cars increase
◦ the price level in Great Britain decreases
◦ income in Great Britain decreases
Question 2
Refer to the information provided in Figure 34.4 below to answer the question(s) that follow.
Refer to Figure 34.4. If the demand and supply of pounds are
D
1 and
S
2, the equilibrium is
◦ $2.50 per pound and the quantity is 400 pounds.
◦ $2.00 per pound and the quantity is 300 pounds.
◦ 2 pound per $ and the quantity is 400 pounds.
◦ $1.50 per pound and the quantity is 200 pounds.
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