Suppose that equilibrium in the dollar-pound market occurs where 300 million pounds are demanded at a price of $1.75 per pound. If the current exchange rate is $1.60 per pound, we know that
a. the dollar-pound market is in equilibrium
b. there is an excess demand for pounds, so the dollar price of the pound will rise
c. there is an excess demand for pounds, and the pound is overvalued
d. there is an excess supply of pounds, and the dollar price of the pound will rise
e. there is an excess supply of pounds, and the dollar price of the pound will fall
B
Economics
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