Consider the market for the British pound sterling (GBP). Note that although the United Kingdom (Great Britain) is an official member of the European Union, it has chosen not to adopt the euro as its official currency. For each of the following, determine whether the situation described is part of the supply, demand, or neither side in the foreign exchange market for GBP. a. John and Adam are British economists who are going to Washington, D. C. for an economics conference. In the foreign exchange market for GBP, John and Adam are part of .

b. An American pharmaceutical firm buys a smaller competitor based in London. In the foreign exchange market for GBP, the American pharmaceutical firm is part of .

c. Louise, who lives in France, is going on a vacation to Germany. In the foreign exchange market for GBP, Louise is part of .

d. Kamran, who moved to Great Britain from India to work as an engineer, sends some of his paycheck each month to his parents in India. In the foreign exchange market for GBP, Kamran is part of .

e. An economics class from the United States is traveling to Great Britain as part of a study-away program. In the foreign exchange market for GBP, these students are part of .

A) Supply

B) Demand

C) Neither side

D) Supply

E) Demand

Explanation:

Determine whether the situation described is part of the supply, demand, or neither side in the foreign exchange market for GBP.

a. John and Adam are British economists who are going to Washington, D.C. for an economics conference. In the foreign exchange market for GBP, John and Adam are part of Supply because they are going to sell GBP in exchange for attending the conference.

b. An American pharmaceutical firm buys a smaller competitor based in London. In the foreign exchange market for GBP, the American pharmaceutical firm is part of Demand because the company is bringing a foreign currency to purchase an asset in London.

c. Louise, who lives in France, is going on a vacation to Germany. In the foreign exchange market for GBP, Louise is part of neither side because their activity has nothing to do with GBP.

d. Kamran, who moved to Great Britain from India to work as an engineer, sends some of his paycheck each month to his parents in India. In the foreign exchange market for GBP, Kamran is part of Supply because he sells off GBP at the point of exchanging to Rupee.

e. An economics class from the United States is traveling to Great Britain as part of a study-away program. In the foreign exchange market for GBP, these students are part of Demand because he will pay in exchange for British educational services.