The U.S. dollar is regarded as the "safe haven" currency; investors flock to it when they are worried about the outlook for the global economy. Fears were at their greatest in late 2008 and early 2009 after the collapse of the Lehman Brothers investment bank in September 2008. If investors flocked to the dollar
A) the exchange rate would increase.
B) the exchange rate would decrease.
C) the exchange rate would not change.
D) the exchange rate could increase or decrease.

Question

Quizplus · Accepted Answer

When investors flock to the U.S. dollar, demand for the dollar increases relative to other currencies. This increased demand typically leads to an increase in the dollar's exchange rate, making the dollar stronger compared to other currencies.

The US Dollar Is Regarded as the "Safe Haven" Currency; Investors