Refer to the Graph Above, Which Shows the Supply and Demand

question 107

Multiple Choice

Refer to the graph above, which shows the supply and demand for British pounds. D₁ and S₁ represent the initial demand and supply curves. If there is a large increase in the number of American tourists visiting Britain because of a major event like the Olympics or the World Cup, then what should the British government do if it wants to fix the exchange rate at its initial level?

• A) Shift D₁ to D₂
• B) Shift D₁ to D₃
• C) Shift S₁ to S₂
• D) Shift S₁ to S₃

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Definitions:

Outstanding

Exceptionally good or prominently distinguished; can also refer to something that is yet to be paid, completed, or resolved.

Insurance Policy

A contract between an individual or entity and an insurance company, detailing the terms for the payment of claims in the event of loss.

War Zone

An area where armed conflict is taking place, often recognized as such by military authorities.

Killed

The action of causing the death of a living entity, whether intentionally or unintentionally.