Figure 15-1 -Refer to Figure 15-1.The equilibrium quantity, Q₁ represents

Question

Quizplus · Accepted Answer

Q₁ represents the quantity of U.S. dollars supplied by U.S. importers and U.S. nationals who purchased foreign assets at the equilibrium exchange rate between the U.S. dollar and foreign currency. This is shown by the intersection of the demand and supply curves. Option A is incorrect because the Federal Reserve does not supply U.S. dollars in foreign markets, but instead affects the money supply through domestic policy. Option B is incorrect because it does not take into account the supply of U.S. dollars by Americans. Option D is incorrect because Q₁ does not represent foreign spending in the U.S., but rather the supply of U.S. dollars in foreign exchange markets.

Figure 15-1 -Refer to Figure 15-1.The Equilibrium Quantity, Q1 Represents

Figure 15-1 -Refer to Figure 15-1.The Equilibrium Quantity, Q₁ Represents