The U.S. dollar will depreciate in value if
A) the demand for the dollar increases.
B) U.S. citizens choose to buy fewer foreign goods.
C) the supply of foreign exchange decreases.
D) the demand for the dollar decreases.

Question

Quizplus · Accepted Answer

A decrease in demand for the dollar means that there is less demand for goods and services denominated in dollars. This can happen if investors and foreign central banks start buying fewer dollars, or if U.S. citizens begin to consume more foreign goods than domestically produced goods. As a result, the value of the dollar falls relative to other currencies.

The U.S. Dollar Will Depreciate in Value If