Consider the Supply-Demand Framework for the British Pound Relative to the U.S.dollar

question 67

Multiple Choice

Consider the supply-demand framework for the British pound relative to the U.S.dollar shown in the nearby chart.The exchange rate is currently $1.80 = £1.00.Which of the following is correct?

• A)To "fix" the exchange rate at $1.80 = £1.00, the Federal Reserve could use contractionary monetary policy to shift the demand curve to the left.
• B)To "fix" the exchange rate at $1.80 = £1.00, the U.S.government could use contractionary fiscal policy to shift the demand curve to the left.
• C)The British Government could use fiscal or monetary policy to shift the supply curve to the right to fix the exchange rate to $1.80 = £1.00.
• D)All of the above.

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Definitions:

Automobile Insurance

A contract between an individual and an insurance company to cover financial loss related to car incidents, such as accidents, theft, or damage.

Personal Property

Items that are movable and not permanently fixed to one location, such as furniture, electronics, and vehicles.

Valued Policy

An insurance policy that pays a predetermined amount to the insured in the event of a total loss, regardless of the value of the lost property.

Fair Market Value

The price that property would sell for on the open market between a willing buyer and a willing seller.