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

question 77

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.

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