If the British pound depreciates against the U.S. dollar Select one: British businesses gain by an...

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

Select one:

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

British consumers lose by an increase in the pound price of U.S. exports to Britain.

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

U.S. consumers lose by an increase in the dollar price of British exports to the United States.

Expert Solution

The depreciation is the loss in the value of domestic currency in terms of foreign currency. The depreciation encourages export of the goods and services for the home currency and discorages imports. This is because the depreciation makes the domestic currency more cheaper in foreign currency and then the foreign individuals demand more products. This is an increase in the exports.

The domestic consumers lose as a result of the depreciation because the depreciation makes the foreign currency more expensive , so they need to pay more cash compared to before for the imports.

Ans: British consumers lose by an increase in the pound price of U.S. exports to Britain.

Rahul Sunny answered 2 years ago

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