Asked by Shyasha Booker on Jul 27, 2024
Verified
Consider the currency market for British pounds and U.S. dollars. A decrease in the supply of British pounds results in
A) an appreciation of the pound and a depreciation of the dollar.
B) a depreciation of the pound and a depreciation of the dollar.
C) an appreciation of the pound and an appreciation of the dollar.
D) a depreciation of the pound and an appreciation of the dollar.
Supply of British Pounds
The total amount of British currency that is available for transactions or investment at any given time.
Currency Market
The currency market, also known as the foreign exchange market, is a global decentralized market for the trading of currencies.
Depreciation
The process of allocating the cost of a tangible asset over its useful life, reflecting the decrease in value due to wear, tear, or obsolescence.
- Comprehend the principles of currency appreciation and depreciation.
- Examine the influence of currency supply and demand alterations on market value movements.
Verified Answer
MJ
Matty JollerJul 28, 2024
Final Answer :
A
Explanation :
A decrease in the supply of British pounds makes pounds scarcer relative to U.S. dollars, leading to an appreciation of the pound (it becomes more valuable) and a depreciation of the dollar (it becomes less valuable compared to the pound).
Learning Objectives
- Comprehend the principles of currency appreciation and depreciation.
- Examine the influence of currency supply and demand alterations on market value movements.