Asked by Lizbeilyn Ozoria on Jun 19, 2024
Verified
In considering pounds and dollars we can say that when the dollar rate of exchange for the pound rises
A) the pound rate of exchange for the dollar will fall.
B) the pound rate of exchange for the dollar will also rise.
C) the pound rate of exchange for the dollar may either fall or rise.
D) American net exports to Britain will tend to fall.
Dollar Rate
The exchange rate of the US dollar against other currencies, influencing international trade and economics.
Exchange
The process of trading one thing for another.
Net Exports
The value of a country's total exports minus its total imports, representing the contribution of trade to the national economy.
- Comprehend the principle of foreign exchange rates and the method for determining the value of one currency relative to another.
- Understand the influence of currency appreciation and depreciation on foreign trade and investment transfers.
Verified Answer
KK
Kareem KamalJun 22, 2024
Final Answer :
A
Explanation :
When the dollar rate of exchange for the pound rises, it means that more dollars can be exchanged for one pound. This makes pounds more expensive in relation to dollars. Therefore, the demand for pounds decreases, causing the pound rate of exchange for the dollar to fall. This relationship between the two currencies is often referred to as an inverse relationship. Additionally, as the pound becomes more expensive, American net exports to Britain tend to fall because British goods become relatively cheaper for American consumers while American goods become relatively more expensive for British consumers.
Learning Objectives
- Comprehend the principle of foreign exchange rates and the method for determining the value of one currency relative to another.
- Understand the influence of currency appreciation and depreciation on foreign trade and investment transfers.