If the US economy is forecast to come out of recession because military expenditure has increase then the exchange value of the UK pound will tend to ?
Correct answer: D. appreciate
- A. depreciate
- B. not be affected
- C. fluctuate more than it would do therwise
- D. appreciate
Explanation
A US recovery driven by higher military spending raises US income and likely increases demand for imports, including UK goods, causing greater demand for pounds. The pound therefore tends to appreciate against the dollar.
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