Question

You work for a British company that is expanding its operations into continental Europe. In order to pay for the expenses of operations in Europe, your company will sell British pounds to purchase euros. Therefore, your company is a demander of pounds in the foreign exchange market.

1) True
2) False

Answer 1

When a British company expands operations into continental Europe, they will sell British pounds to purchase euros, making them a demander of pounds in the foreign exchange market.

Step-by-step explanation:

In the foreign exchange market, a person or firm who demands one currency must supply another currency, and vice versa. When a British company expands its operations into continental Europe and needs to pay for expenses in euros, the company will sell British pounds to purchase euros. This makes the company a demander of pounds in the foreign exchange market.