Figure 15-2 -Refer to Figure 15-2. Suppose the Exchange Rate Between the Rate

question 12

Multiple Choice

Figure 15-2
-Refer to Figure 15-2. Suppose the exchange rate between the dollar and the British pound Jis fixed at £0.3 per dollar. Now suppose U.S. residents choose to purchase more British goods and services. What happens in the foreign exchange market?

• A) The demand curve for dollars increases, and the equilibrium exchange rate for the dollar (in terms of pounds) rises.
• B) The supply curve for dollars increases, and the equilibrium exchange rate for the dollar (in terms of pounds) falls.
• C) The demand curve for dollars decreases, and the equilibrium exchange rate for the dollar (in terms of pounds) falls.
• D) The supply curve for dollars decreases, and the equilibrium exchange rate for the dollar (in terms of pounds) rises.

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Definitions:

Consumer Revolution

A period marked by an increase in the consumption and variety of luxury goods and products by individuals from different economic classes.

Seven Years' War

A global conflict fought between 1756 and 1763, involving most of the great powers of the time and affecting Europe, North America, Central America, the West African coast, India, and the Philippines.

French and Indian War

A conflict between Britain and France (1754-1763) in North America, part of a larger global contest, which also involved Native American tribes aligned with each side.

George Washington

The first President of the United States (1789-1797), commander-in-chief of the Continental Army during the American Revolutionary War, and one of the Founding Fathers of the United States.