When in 1985 a British Pound Cost Approximately $1

question 63

Multiple Choice

When in 1985 a British pound cost approximately $1.30,a Shetland sweater that cost 100 British pounds would have cost $130. With a weaker dollar,the same Shetland sweater would have cost

• A)less than $130.
• B)more than $130.
• C)$130,since the exchange rate does not affect the prices that American consumers pay for foreign goods.
• D)$130,since the demand for Shetland sweaters will decrease to prevent an increase in price due to the stronger dollar.

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