In a Competitive Foreign-Exchange Market Between the Canadian Dollar and the British

question 29

Multiple Choice

In a competitive foreign-exchange market between the Canadian dollar and the British pound,a price of pounds (in terms of dollars) below the free-market equilibrium would

• A)result in the quantity of pounds supplied being greater than the quantity demanded.
• B)indicate that all people who wish to purchase pounds will be able to do so at the current exchange rate.
• C)lead to an appreciation of the dollar.
• D)result in a sustained shortage of pounds.
• E)lead to a depreciation of the dollar.

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