In the foreign exchange market, the exchange value of the U.S.dollar will depreciate if
A) the demand for the dollar increases (shifts to the right).
B) the demand for the dollar decreases (shifts to the left).
C) the supply curve of the dollar decreases (shifts to the left).
D) the supply curve of the dollar remains constant.

Question

Quizplus · Accepted Answer

According to the law of demand, when the demand for a good decreases, its value decreases as well. Therefore, if the demand for the U.S. dollar decreases in the foreign exchange market, its exchange value will depreciate.

In the Foreign Exchange Market, the Exchange Value of the U.S.dollar