Answer to Question #146551 in Macroeconomics for Masana

Question

Draw a demand and supply curve for British pounds (on the vertical axis plot rand per British pound). (5). What factors are likely to cause an increase in the demand for British pounds (in exchange for South African Rands)?2. How can this be illustrated in the diagram you have drawn? Does this represent an appreciation or depreciation of the South African rand relative to the British pound?3.

Answer 1

A demand and supply curve for British pounds will intersect in equilibrium point.

The increase in imports from the UK, more tourists from South Africa going to the UK are likely to cause an increase in the demand for British pounds. It will represented as the rightward shift of the demand curve. This represents a depreciation of the South African rand relative to the British pound.