If economic growth perks up in the United States so that investors think they can realize larger profits from American assets,the
A) supply of U.S.dollars will increase in the foreign exchange market
B) the demand for U.S.dollars will increase in the foreign exchange market
C) the demand for U.S.dollars will decrease in the foreign exchange market
D) the demand for U.S.dollars will remain constant in the foreign exchange market

Question

Quizplus · Accepted Answer

If investors expect larger profits from American assets, they will demand more U.S. dollars in order to invest in those assets. This will increase the demand for U.S. dollars in the foreign exchange market, causing the exchange rate to rise.

If Economic Growth Perks Up in the United States So