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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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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