When foreign residents increase their demand for U.S.dollars,ceteris paribus,

Question

Quizplus · Accepted Answer

When foreign residents increase their demand for U.S. dollars, other things being equal, the dollar will appreciate in value. This is because increased demand for dollars means that foreign residents are willing to pay more of their own currency to acquire the dollars. As a result, the price of foreign currency will fall, reducing supply of foreign currency to the foreign exchange market.

When Foreign Residents Increase Their Demand for U