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

question 69

Multiple Choice

If the dollar price of the English pound goes from $1.50 to $2.00,the dollar has

• A)appreciated,and the English will find U.S.goods cheaper.
• B)appreciated,and the English will find U.S.goods more expensive.
• C)depreciated,and the English will find U.S.goods cheaper.
• D)depreciated,and the English will find U.S.goods more expensive.

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Definitions:

Perfect Substitutes

Perfect substitutes are products or services that can be used in exactly the same way, offering the same utility to consumers, thus one can replace the other without loss of value or function.

Homothetic Preferences

Consumer preferences that are consistent or proportionate across different scales or levels of consumption, indicating a straight line through the origin in a utility function graph.

Quasilinear Preferences

Preferences where utility is a linear function of one good, making the consumer's marginal rate of substitution between goods independent of the level of consumption of that good.

Convex Preferences

Consumer preferences where the consumer prefers averages or mixes of goods to extremes, represented graphically by convex indifference curves.