When the Exchange Rate for the British Pound Changes from $1.80

question 13

Multiple Choice

When the exchange rate for the British pound changes from $1.80 per pound to $1.60 per pound, then, holding everything else constant, the pound has ________ and ________ expensive.

• A) appreciated; British cars sold in Canada become more
• B) appreciated; British cars sold in Canada become less
• C) depreciated; American wheat sold in Britain becomes more
• D) depreciated; American wheat sold in Britain becomes less

---

Definitions:

Perfectly Elastic

A situation where the demand or supply responds infinitely to changes in price, resulting in a horizontal demand or supply curve.

Perfectly Inelastic

A market condition where the quantity demanded or supplied does not change in response to price changes; the demand or supply curve is perfectly vertical.

Relatively Elastic

Describes a situation where a small change in price leads to a significant change in quantity demanded or supplied.

Marginal Revenue

The additional income received from selling one more unit of a good or service, vital for decision-making in firms.