If the United States were to impose import quotas
A)the demand for loanable funds and the demand for dollars in the market for foreign-currency exchange would both increase.
B)neither the demand for loanable funds nor the demand for dollars in the market for foreign-currency exchange would increase.
C)the demand for loanable funds would increase, but the demand for dollars in the market for foreign-currency exchange would not.
D)the demand for dollars in the market for foreign-currency exchange would increase, but the demand for loanable funds would not.

Question

Quizplus · Accepted Answer

Imposing import quotas would reduce the supply of foreign goods, leading to an increased demand for domestic alternatives. This does not directly affect the demand for loanable funds but increases the demand for dollars as domestic consumers and businesses would need fewer foreign currencies, thus increasing the demand for dollars in the foreign exchange market.

If the United States Were to Impose Import Quotas