If British Interest Rates Suddenly Increase Substantially Relative to U

question 51

Multiple Choice

If British interest rates suddenly increase substantially relative to U.S. interest rates, the demand by U.S. investors for British pounds ____, the supply of British pounds to be sold in exchange for dollars ____, and the British pound will ____.

• A)increases; decreases; appreciate
• B)increases; decreases; depreciate
• C)decreases; increases; appreciate
• D)decreases; increases; depreciate
• E)none of the above

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Definitions:

Mortgage Rate

The interest rate charged on a mortgage, typically expressed as an annual percentage.

GST

Goods and Services Tax, a type of value-added tax imposed on the majority of goods and services that are sold within the country for local use.

Supplies

Materials and goods held for use in the production process or office operations, often considered short-term assets in financial accounting.

GST and PST

Taxes applied to the sale of goods and services; GST is a federal tax in Canada, while PST is a provincial sales tax.