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

Question

Quizplus · Accepted Answer

When the supply of dollars decreases and the demand for dollars increases, this creates a shortage of dollars which makes them more valuable. As a result, the exchange rate would rise.

When Would the Exchange Rate Rise the Most