If British residents want more French francs to purchase more French cloths other things equal, then the equilibrium value of the pound against the French franc will ?
Correct answer: B. fall
- A. rise
- B. fall
- C. not change
- D. fluctuate
Explanation
Greater British demand for French francs increases the supply of pounds in the foreign-exchange market. With more pounds offered relative to francs, the pound’s value falls.
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