Everything else held constant,if a factor increases the demand for ________ goods relative to ________ goods,the domestic currency will appreciate.

Question

Quizplus · Accepted Answer

If a factor increases the demand for domestic goods relative to foreign goods, it means that there will be an increase in demand for the domestic currency in order to purchase those goods. This increased demand for the domestic currency will lead to its appreciation. Therefore, the correct option is D, where an increase in demand for domestic goods relative to foreign goods will cause the domestic currency to appreciate.

Everything Else Held Constant,if a Factor Increases the Demand for ________