Importing a foreign good increases the __________ the foreign currency and increases the __________ the currency of the importing country in the foreign exchange market.
A) demand for; demand for
B) demand for; supply of
C) supply of; demand for
D) supply of; supply of

Question

Quizplus · Accepted Answer

Importing a foreign good increases the demand for the foreign currency, as importers need to buy the foreign currency to pay for the goods. It also increases the supply of the importing country's currency in the foreign exchange market, as the foreign sellers receive the importing country's currency and may exchange it for their own currency.

Importing a Foreign Good Increases the __________ the Foreign Currency