-In the figure above, the shift in the supply curve for U.S. dollars from S₀ to S₁ could occur when A) the U.S. interest rate falls. B) foreign interest rates fall. C) the expected future exchange rate falls. D) the current exchange rate falls.

Question

Quizplus · Accepted Answer

When foreign interest rates fall, investors find U.S. assets more attractive, increasing the demand for U.S. dollars and shifting the supply curve of dollars in the foreign exchange market.

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