-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 rises. B) foreign interest rates rise. C) the expected future exchange rate falls. D) the current exchange rate rises.

Question

Quizplus · Accepted Answer

A shift in the supply curve for U.S. dollars could occur when the U.S. interest rate rises because higher interest rates attract foreign capital, increasing the supply of dollars as investors exchange their currency for dollars to invest in the U.S.

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