-In the figure above, the shift in the supply curve for U.S. dollars from S₀ to S₂ could occur when A) the current exchange rate rises. B) the current exchange rate falls. C) the expected future exchange rate rises. D) the expected future exchange rate falls.

Question

Quizplus · Accepted Answer

A shift in the supply curve from S0 to S2 indicates an increase in the supply of U.S. dollars. This can occur when the expected future exchange rate falls, as people would want to sell more dollars now before the value decreases further.

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