-In the figure above, suppose the economy is initially at point B. If people come to believe that the exchange rate will fall in the future, the supply of dollars and the market moves to point such as .

Question

Quizplus · Accepted Answer

If people expect the exchange rate to fall in the future, they will likely sell dollars now, increasing the supply of dollars, which moves the market to a point like C.

-In the Figure Above, Suppose the Economy Is Initially at Point