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Chapter 1: Q.15 (page 66)

How would a fall in the value of the pound sterling affect British consumers?

Short Answer

Expert verified

Foreign goods are relatively inexpensive. British consumers are hurt.

Step by step solution

01

Step 1. Introduction

Exchangerate, the price of money in one country against money in another country. If a country uses gold or other agreed standard and each currency deserves a specific standard of metal or other standard, the exchange rate will be "fixed".

02

Step 2. Explanation

The fall in the value of pound sterling will depreciate the pound in comparison to dollar. Which shows to buy a foreign commodity the British consumer will have to spend more money out of their pockets. As compared to their home currency value the foreign goods will become more cheap.

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Name two institutions that are not important financial intermediaries in an economy

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Go to the St. Louis Federal Reserve FRED database and find data on the M1 money supply (M1SL) and the 10-year treasury bond rate (GS10). Add the two series into a single graph by using the “Add Data Series” feature. Transform the M1 money supply variable into the M1 growth rate by adjusting the units for the M1 money supply to “Percent Change from Year Ago.”

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