If the Dollar Price of the English Pound Increases from $1.50

question 16

Multiple Choice

If the dollar price of the English pound increases from $1.50 to $1.75, the dollar has

• A) appreciated relative to the pound, and English goods have become less expensive to U.S. consumers.
• B) depreciated relative to the pound, and English goods have become less expensive to U.S. consumers.
• C) appreciated relative to the pound, and English goods have become more expensive to U.S. consumers.
• D) depreciated relative to the pound, and English goods have become more expensive to U.S. consumers.

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Definitions:

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers, leading to a stable market condition.

Equilibrium Quantity

The quantity of goods or services supplied is equal to the quantity demanded at the market equilibrium price.

Demand Increases

A situation wherein there is a rise in the quantity of a product or service sought after by consumers at a given price level.

Equilibrium Price

The price level at which the amount of products available for sale matches the amount consumers want to buy.