When the price of foreign currency (i.e.,the exchange rate) is above the equilibrium level:
A) An excess supply of that currency exists in the foreign exchange market
B) An excess demand for that currency exists in the foreign exchange market
C) The supply of foreign exchange shifts outward to the right
D) The supply of foreign exchange shifts backward to the left

Question

Quizplus · Accepted Answer

When the exchange rate is above the equilibrium level, it means the currency is more expensive than the market-clearing price, leading to an excess supply of that currency as fewer people are willing to buy it at the higher price.

When the Price of Foreign Currency (I