If the Exchange Rate Has Been $2

question 3

Multiple Choice

If the exchange rate has been $2.00 per British pound but now falls to $1.60 per British pound, there will be

• A) more U.S. imports from Great Britain because the price of pounds has fallen.
• B) more exports to Great Britain because the price of pounds has risen.
• C) fewer exports to Great Britain because the price of the pound has risen.
• D) more U.S. exports to Great Britain since the price of the dollar has fallen.
• E) no change in either exports or imports.

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Definitions:

Equity

Refers to fairness or justice in the distribution of wealth, resources, and opportunities.

Total Surplus

The sum of consumer surplus and producer surplus in a market, representing the total net benefit to society.

Equilibrium Price

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

Equilibrium Quantity

The amount of goods or services that are bought and sold at the equilibrium price, where market demand meets market supply.