In the table above, if the exchange rate is equal to $1.00 per pound, then there is a ______, and the exchange rate will______.
A) surplus of pounds, decrease
B) surplus of pounds, increase
C) shortage of pounds, decrease
D) shortage of pounds, increase

Question

Quizplus · Accepted Answer

According to the table, if the exchange rate is $1.00 per pound, there is a shortage of pounds, meaning that demand for the Euro exceeds supply. To correct the shortage, the exchange rate will increase, meaning it will take more pounds to purchase one Euro. Therefore, choice D is the correct answer.

In the Table Above, If the Exchange Rate Is Equal