If the British pound depreciates against the U.S. dollar Select one: A. British consumers lose by...

If the British pound depreciates against the U.S. dollar

Select one:

A. British consumers lose by a decrease in the pound price of U.S. exports to Britain.

B. British consumers gain by a decrease in the pound price of U.S. exports to Britain.

C. British businesses gain by an increase in the dollar price of exports to the United States.

D. U.S. consumers win by a decrease in the dollar price of British exports to the United States.

Solutions

Expert Solution

It shall be noted that when the British pound depreciates against the US dollar, it means that, to buy 1 US dollar, one has to exchange larger units of the British pound.

That also means that one has to spend less of US dollars to purchase the same units of the British pound.

Since the US exporters have to make payments to British firms in British pounds for the British exports to the United States, it means, the US consumers have to spend less of US dollars to purchase the same units of the British pound.

Thus, the correct answer is D. U.S. consumers win by a decrease in the dollar price of British exports to the United States.

Rahul Sunny answered 2 years ago

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