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A-Level Economics · Currency appreciation (hot money) diagram question

Which point on the exchange-rate axis is the APPRECIATED pound?

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The diagram

The answer

Point B. D₂ crosses S at F; read across to the axis — the pound rises from e₁ to e₂, and more pounds are traded too. Find the new crossing first: D₂ meets S at point F. Then read ACROSS to the exchange-rate axis — point B, e₂. Appreciation means each pound buys MORE dollars, so B sits ABOVE A.

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This is one of 6 questions on the currency appreciation (hot money) diagram — every corner lettered, every wrong answer diagnosed.

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