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, it means that they need more dollars to make transactions or investments in the United States. This increases the demand for dollars in the foreign exchange market, and since the supply of dollars remains constant, the dollar appreciates in value. This is because foreign residents are willing to pay more of their own currency to get the necessary amount of dollars, which drives up the exchange rate.

When Foreign Residents Increase Their Demand for U