The following figure depicts the supply of U.S. dollars in the foreign currency exchange market. Use this figure to answer the following questions.
-The U.S.central bank has the power to increase or decrease the supply of U.S.dollars.If the U.S.central bank increases the supply of U.S.dollars,the supply curve in the above figure will ________; if the U.S.central bank decreases the supply of U.S.dollars,the supply curve in the above figure will ________.

Question

The following figure depicts the supply of U.S. dollars in the foreign currency exchange market. Use this figure to answer the following questions. 
-The U.S.central bank has the power to increase or decrease the supply of U.S.dollars.If the U.S.central bank increases the supply of U.S.dollars,the supply curve in the above figure will ________; if the U.S.central bank decreases the supply of U.S.dollars,the supply curve in the above figure will ________.

Quizplus · Accepted Answer

If the U.S. central bank increases the supply of U.S. dollars, the supply curve in the above figure will shift rightward. This is because the U.S. central bank has the power to increase the amount of U.S. dollars in circulation by buying U.S. government securities or lowering the reserve requirements for banks. This increases the supply of U.S. dollars in the foreign currency exchange market, causing the supply curve to shift rightward. Similarly, if the U.S. central bank decreases the supply of U.S. dollars, the supply curve in the above figure will shift leftward.

The Following Figure Depicts the Supply of U