Other things remaining the same, the
A) higher the exchange rate, the greater is the expected profit from selling dollars.
B) larger the value of U.S. imports, the smaller is the quantity of foreign currency demanded.
C) larger the value of U.S. imports, the greater is the quantity of U.S. dollars supplied to the foreign exchange market.
D) lower the exchange rate, the cheaper are foreign-produced goods and services.

Question

Quizplus · Accepted Answer

When the value of U.S. imports increases, more U.S. dollars are needed to purchase foreign goods, leading to a greater supply of U.S. dollars in the foreign exchange market.

Other Things Remaining the Same, the