If the British Pound (£)Appreciates by 10% Against the Dollar

question 14

Multiple Choice

If the British pound (£) appreciates by 10% against the dollar:

• A) both the US importers from Britain and US exporters to Britain will be helped by the appreciating pound.
• B) the US exporters will find it harder to sell to foreign customers in Britain.
• C) the US importer of British goods will tend to find that their cost of goods rises,hurting its bottom line.
• D) both US importers of British goods and exporters to Britain will be unaffected by changes in foreign exchange rates.
• E) all of the above.

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Definitions:

Total Surplus

The sum of consumer surplus and producer surplus, representing the total net benefit to society from producing and consuming a good or service.

Consumer Surplus

Consumer surplus is the difference between the total amount that consumers are willing and able to pay for a good or service and the total amount they actually pay.

Producer Surplus

The gap between the price producers are ready to take for offering a product or service and the actual payment they receive.

Consumer Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay, representing the benefit consumers receive.