If currency dealers expect the value of the pound to fall, the exchange value will tend to ?
Correct answer: A. depreciate
- A. depreciate
- B. not be affected
- C. fluctuate more than it would do therwise
- D. appreciate
Explanation
Expected selling of the pound increases its supply in the foreign-exchange market, while reduced demand may also occur. This expectation can become self-fulfilling, causing the pound to depreciate.
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