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

question 35

Multiple Choice

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

• A)result in the quantity of dollars supplied being greater than the quantity demanded.
• B)lead to a depreciation of the dollar.
• C)result in the quantity of pounds demanded being greater than the quantity supplied.
• D)indicate that some people who wish to purchase pounds will not be able to do so at the current exchange rate.
• E)lead to an appreciation of the dollar.

---

Definitions:

Government Payment

Financial transfers made by the government to individuals, firms, or other entities, typically aimed at achieving economic or policy objectives.

Utility Function

A mathematical representation that ranks an individual's preferences for various bundles of goods, reflecting satisfaction or happiness.

Consumption

The use of goods and services by households, contributing to their well-being and satisfaction.

Leisure

Time spent away from work and other compulsory activities, used for relaxation or chosen activities.