Figure 10-2

-Refer to Figure 10-2.The demand for dollars curve slopes downwards because

Question

Figure 10-2
 
-Refer to Figure 10-2.The demand for dollars curve slopes downwards because

Quizplus · Accepted Answer

The demand for dollars curve slopes downwards because a higher exchange rate tends to decrease U.S. exports, thereby generating a lower quantity of dollars in the foreign exchange market. This is because as the exchange rate increases, the price of U.S. goods becomes more expensive for foreign buyers, leading to a decrease in demand for U.S. exports and a decrease in the quantity of dollars that foreign buyers will need to purchase.

Figure 10-2 -Refer to Figure 10-2.The Demand for Dollars Curve Slopes Downwards