Use the Figure Below to Answer the Following Question(s)

question 76

Multiple Choice

Use the figure below to answer the following question(s) .
Figure 18-2
-Figure 18-2 illustrates supply and demand for U.S. dollars and British pounds in the foreign exchange market. Which of the following would cause the demand for foreign exchange (pounds) to shift from D₁ to D₂?

• A)an increase in the real interest rate in Britain relative to the United States
• B)higher inflation in Britain than in the United States
• C)higher income growth in Britain than in the United States
• D)an increase in the number of British citizens vacationing in the United States

---

Definitions:

Laissez-faire Capitalism

An economic philosophy advocating for minimal government intervention in the market.

Minimal Government Intervention

Minimal government intervention refers to an economic policy or philosophy where the government has a very limited role in the economy, allowing the market to operate with minimal regulatory influence.

Market System

An economic system where decisions regarding investment, production, and distribution are guided by the price signals created by the forces of supply and demand.

Self-interest

Acting in a way that is most beneficial for oneself.