Saudi Telecom is a major producer of telecommunications equipment in Saudi Arabia. The Free Market Iraqi Conglomerate FMIC) is a collections of over 100 firms that wish to upgrade the communications infrastructure of Iraqi. When FMIC buys $4.5 million U.S. dollars worth of equipment from Saudi Telecom, the
A) demand curve for Iraqi dinars and the supply curve for U.S. dollars both shift rightward.
B) demand curve for Saudi Arabian riyals and the supply curve for Iraqi dinars both shift rightward.
C) demand curve for U.S. dollars shifts rightward.
D) demand curve for Saudi Arabian riyals and the supply curve for U.S. dollars both shift rightward.

Question

Quizplus · Accepted Answer

When FMIC buys equipment from Saudi Telecom, they need Saudi Arabian riyals to pay for it, increasing the demand for riyals. To obtain riyals, they supply Iraqi dinars, shifting the supply curve for dinars rightward.

Saudi Telecom Is a Major Producer of Telecommunications Equipment in Saudi