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Suppose the Price of Alston's Currency Is Rising Very Rapidly

Question 140

Multiple Choice

Suppose the price of Alston's currency is rising very rapidly. The Central Bank of Alston
Announced that it might seek to hold off further increases in order to prevent a major
Reduction in net exports. How are buyers and sellers in Alston's foreign exchange market
Likely to respond to this announcement?


A) Buyers are likely to increase the demand and sellers are likely to decrease the supply of Alston dollars, leading to an increase in the exchange rate.
B) Buyers are likely to reduce the demand and sellers are likely to increase the supply of Alston dollars, leading to a decrease in the exchange rate.
C) Buyers and sellers are likely to increase their demand and supply respectively, leading to an increase in the exchange rate of the Alston dollar.
D) Buyers and sellers are likely to decrease their demand and supply respectively, leading to a decrease in the exchange rate of the Alston dollar.

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