In the foreign exchange market, a change in which of the following will result in a movement along the demand curve for U.S. dollars?
A) the U.S. interest rate
B) the interest rate in the foreign country
C) the expected future exchange rate
D) the exchange rate

Question

Quizplus · Accepted Answer

A change in the exchange rate will result in a movement along the demand curve for U.S. dollars, as it directly affects the quantity demanded of dollars in relation to foreign currencies. Changes in other factors, such as interest rates or expected future exchange rates, will shift the entire demand curve.

In the Foreign Exchange Market, a Change in Which of the Following