Question

Draw the demand and supply curves and provide brief explanations about the exchange rate and the value of the domestic currency in each case. Note: you just need to state whether the dollar has appreciated or depreciated and whether the exchange rates (R) goes up or down) (after drawing the graphs). Note: be sure to use the currency of the foreign country implied in each question!

a) Real GDP growth in Britain rose relative to the U.S. (assume that the two countries are important trading partners).

b) Inflation in Great Britain rose relative to the inflation rate in the U.S.

c) The British became bullish (that is, they feel good) about the U.S. economy.

Answer 1

This is my answer

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