If USSecurities Pay 7 Percent Interest, and If Great Britain's Securities

question 153

Multiple Choice

If U.S.securities pay 7 percent interest, and if Great Britain's securities pay 5 percent interest, then

• A)pounds depreciate relative to dollars.
• B)pounds appreciate relative to dollars.
• C)Great Britain's imports will rise.
• D)Great Britain's exports will fall.

---

Definitions:

British Pounds

The currency of the United Kingdom, used as a medium of exchange within the country and its territories.

Balance on Goods

Balance on goods refers to the difference between a country's exports and imports of physical products, excluding services.

Services Surplus

Services Surplus describes a situation where the value of exported services of a country exceeds the value of its imported services, contributing positively to its trade balance.

Capital and Financial Account

Refers to parts of the balance of payments where capital transfers, investments, and financial derivatives are recorded.