-In the figure above, the shift in the demand curve for U.S. dollars from D₀ to D₁ could occur when A) the expected future exchange rate falls. B) the U.S. interest rate decreases. C) people expect that the dollar will appreciate. D) foreign interest rates increase.

Question

Quizplus · Accepted Answer

The shift in the demand curve for U.S. dollars can occur when people expect that the dollar will appreciate. This expectation makes holding dollars more attractive, increasing demand for them now in anticipation of their higher future value.

-In the Figure Above, the Shift in the Demand Curve