Figure 15-1
-Refer to Figure 15-1. The demand curve of dollars represents
I. U.S. purchases of imported goods and services.
II. payments to U.S. owners of foreign assets.
III. demand for U.S. Treasury bonds by U.S. residents.
IV. foreigners' purchases of U.S. assets.

Question

Figure 15-1 
-Refer to Figure 15-1. The demand curve of dollars represents
I. U.S. purchases of imported goods and services.
II. payments to U.S. owners of foreign assets.
III. demand for U.S. Treasury bonds by U.S. residents.
IV. foreigners' purchases of U.S. assets.

Quizplus · Accepted Answer

The demand for dollars from foreigners represents their purchases of U.S. assets, such as Treasury bonds, and the demand for dollars from U.S. owners of foreign assets also represents their purchases of U.S. assets. The demand for dollars for U.S. purchases of imported goods and services is represented by the supply of foreign currency, not the demand for dollars. The demand for U.S. Treasury bonds by U.S. residents is represented by the domestic demand for dollars, not the demand for foreign currency. So the correct option is II and IV.

Figure 15-1 -Refer to Figure 15-1. the Demand Curve of Dollars Represents