As the expected future exchange rate for dollars increases,
A) the expected profit from selling U.S. dollars today falls.
B) the supply of U.S. dollars decreases.
C) the U.S. interest rate will fall.
D) Both answers A and B are correct.

Question

Quizplus · Accepted Answer

When the expected future exchange rate for dollars increases, the expected profit from selling U.S. dollars today falls, leading to a decrease in the supply of U.S. dollars.

As the Expected Future Exchange Rate for Dollars Increases