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

question 145

Multiple Choice

Use the figure below to answer the following question(s) .
Figure 18-1
-Figure 18-1 illustrates supply and demand for U.S. dollars and British pounds in the foreign exchange market. If the dollar price of pounds is $1.20, which of the following is true?

• A)There is an excess supply of pounds, and the dollar price of pounds will rise.
• B)There is an excess demand for pounds, and the dollar price of pounds will rise.
• C)There is an excess supply of pounds, and the dollar price of pounds will fall.
• D)There is an excess demand for pounds, and the dollar price of pounds will fall.

---

Definitions:

Indifference Curve

a graph showing different combinations of two goods that give a consumer equal satisfaction and utility.

Budget Constraint

The limitations on the consumption choices of an individual or household due to limited financial resources.

MUx/MUy

Represents the marginal utility of good x divided by the marginal utility of good y, often used in consumer choice theory to analyze optimal consumption points.

Indifference Curve Analysis

A graphical representation of consumer preferences showing combinations of goods or services among which they are indifferent, demonstrating varying levels of utility.