All else being equal, if European firms switch from U.S. produced software to software produced in India, the equilibrium value of the U.S. dollar will:
A)rise.
B)fall.
C)become fixed.
D)either rise or fall depending on whether the supply or demand for dollars changes more.

Question

Quizplus · Accepted Answer

If European firms reduce their demand for U.S. produced software, these firms will need fewer dollars. This decreases world demand for dollars and the exchange rate for the U.S. dollar will fall.

All Else Being Equal, If European Firms Switch from U