Given the following five examples, carefully explain what will happen to the pound relative to the Euro.

Use two graphs (one graph showing changes in GBP and one graph showing changes in Euro) with changes in Supply and Demand for the pound relative to the Euro on Graph one and changes in Demand and Supply for the euro relative to the Pound on graph two. Do this for each example. Hold all else equal for each example.

a. Great Britains national income falls relative to that of the European Union

b. Inflation falls in the Great Britain relative to the European Union

c. Prices in Europe and Great Britain are falling at the same rate

d. Real interest rates in Great Britain fall relative to real rates in Europe

e. Europe lowers restrictions for Great Britain firms (after Brexit) purchasing companies and real estate in the European Union