Can someone help me please?
Suppose Britain experiences unusually strong GDP growth and a rapid increase in its Consumer Price Index (CPI). Answer the following questions about what would most likely result:
Note: the British currency is called the pound.
- What specific monetary policy action would Britain's central bank - their "Fed" - take?
- How would American investors react to the Bank of England's action?
- How would the Americans' actions impact the foreign exchange market?
Explain what happens to both currencies and use the proper vocabulary.
- How would the changes in the foreign exchange market affect John, the owner of a British hotel who usually has many American guests?
- How would the changes in the foreign exchange market affect the American balance of trade?
