-In the figure above, the shift in the supply curve for U.S. dollars from S₀to S₂could occur when A) the U.S. interest rate differential increases. B) the expected future exchange rate rises. C) the U.S. interest rate falls. D) the current exchange rate falls.

Question

Quizplus · Accepted Answer

A fall in the U.S. interest rate makes holding U.S. dollars less attractive, increasing the supply of dollars as investors seek higher returns elsewhere.

-In the Figure Above, the Shift in the Supply Curve