Assume the Following Bid and Ask Rates of the Pound

question 58

Multiple Choice

Assume the following bid and ask rates of the pound for two banks as shown below:
$$\begin{array} { l l l } & \underline { \text { Bid } } & \underline { \text { Ask } } \\\text { Bank C } & \$ 1.61 & \$ 1.63 \\\text { Bank D } & \$ 1.58 & \$ 1.60\end{array}$$
As locational arbitrage occurs:

• A) the bid rate for pounds at Bank C will increase; the ask rate for pounds at Bank D will increase.
• B) the bid rate for pounds at Bank C will increase; the ask rate for pounds at Bank D will decrease.
• C) the bid rate for pounds at Bank C will decrease; the ask rate for pounds at Bank D will decrease.
• D) the bid rate for pounds at Bank C will decrease; the ask rate for pounds at Bank D will increase.

---

Definitions:

Public Employees Unions

Labor organizations representing workers employed by governmental bodies, focusing on negotiating wages, working conditions, and benefits.

Labor Union Membership

The enrollment and participation of workers in a labor union to collectively bargain for better wages, working conditions, and benefits.

Southern States

Refers to the states located in the southern region of the United States, often characterized by distinct historical, cultural, and economic aspects.

Monopsonies

Market situations where there is only one buyer for a particular product or service, giving the buyer significant power over prices.