Which event does NOT occur when there is an excess supply of U.S. dollars?

Question

Quizplus · Accepted Answer

An excess supply of U.S. dollars means that there are more dollars in circulation than there is demand for them. As a result, people may be more willing to sell dollars, leading to a decrease in the value of the dollar. A depreciation of the dollar makes U.S. exports cheaper for foreign buyers, leading to increased demand and a rise in exports. On the other hand, imports become relatively more expensive for U.S. buyers, leading to a decline in imports. However, the U.S. current account, which measures the balance of trade in goods and services, would actually improve in this scenario, as exports increase and imports decrease, resulting in a lower trade deficit or possibly a trade surplus. Therefore, the correct answer is D, as this event would not occur.

Which Event Does NOT Occur When There Is an Excess