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

question 57

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 $1.80, 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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Definitions:

Expected Rate

A statistical measure often used to indicate the anticipated return or performance of an investment or economic variable over a specific period.

Total Investment

The aggregate amount of money dedicated to the purchase of assets, stocks, bonds, property, or other investment vehicles with the potential for generating profit or income.

Interest Rate

The cost of borrowing money or the return on invested resources, typically expressed as a percentage of the principal amount per time period.

Expected Rate

Typically refers to the predicted yield or return of an investment over a specific period.