When would the exchange rate fall the most?
A)The supply of and demand for dollars both decrease.
B)The supply of and demand for dollars both increase.
C)The supply of dollars decreases, and the demand for dollars increases.
D)The supply of dollars increases, and the demand for dollars decreases.
E)The Bank of Canada intervenes.

Question

Quizplus · Accepted Answer

The exchange rate would fall the most when the supply of dollars increases and the demand for dollars decreases, as this would lead to a surplus of dollars in the market, decreasing its value relative to other currencies.

When Would the Exchange Rate Fall the Most