If people expect the foreign exchange rate for dollars to rise in the future,
A) there is a movement along the demand curve for dollars.
B) the demand for dollars is unaffected.
C) the demand for dollars decreases.
D) the demand for dollars increases.

Question

Quizplus · Accepted Answer

If people expect the foreign exchange rate for dollars to rise in the future, they will want to buy dollars now to get a better exchange rate in the future. This will increase the demand for dollars, as more people will be willing to exchange their own currency for dollars.

If People Expect the Foreign Exchange Rate for Dollars to Rise