Question: Table shows supply and demand schedules for the British pound. Assume that exchange rates are flexible. a. The equilibrium exchange rate equals____. At this exchange

Table shows supply and demand schedules for the British pound. Assume that exchange rates are flexible.

a. The equilibrium exchange rate equals____. At this exchange rate, how many pounds will be purchased, and at what cost in terms of dollars?

b. Suppose the exchange rate is $2 per pound. At this exchange rate, there is an excess (supply/ demand) of pounds. This imbalance causes (an increase/a decrease) in the dollar price of the pound, which leads to (a/an) ____in the quantity of pounds supplied and (a/an) ____in the quantity of pounds demanded.

c. Suppose the exchange rate is $1 per pound. At this exchange rate, there is an excess (supply/ demand) for pounds. This imbalance causes (an increase/a decrease) in the price of the pound, which leads to (a/an) ____ in the quantity of pounds supplied and (a/an) ____ in the quantity of poundsdemanded.

Table shows supply and demand schedules for the British pound.

SUPPLY AND DEMAND OF BRITISH POUNDS Quantity of Dollars per Quantity of Pounds Supplied Pound Pounds Demanded $2.50 2.00 1.50 1.00 .50 50 40 30 20 10 10 20 30 40 S0

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