Other things remaining the same, the ________ the exchange rate for dollars, the greater the ________ in the foreign exchange market.
A) higher; quantity of dollars supplied
B) higher; quantity of dollars demanded
C) lower; value of U.S. imports
D) higher; expected profits from holding dollars

Question

Quizplus · Accepted Answer

The higher the exchange rate for dollars, the more dollars those holding foreign currency can get per unit of their currency, which increases the quantity of dollars supplied in the foreign exchange market as sellers are incentivized to exchange more dollars at higher rates.

Other Things Remaining the Same, the ________ the Exchange Rate