Which of the following would tend to shift the supply of dollars in the foreign-currency exchange market model to the right?
A) The exchange rate rises.
B) The exchange rate falls.
C) The expected rate of return on Canadian assets rises.
D) The expected rate of return on Canadian assets falls.

Question

Quizplus · Accepted Answer

A fall in the expected rate of return on Canadian assets would incentivize investors to hold fewer Canadian assets and more dollars, increasing the supply of dollars in the foreign-currency exchange market model. The other choices would not necessarily affect the supply of dollars.

Which of the Following Would Tend to Shift the Supply