-Using the above figure, an increase in the demand for Dutch goods by U. S. consumers will lead to
A) a depreciation in the Dutch currency (i.e. the guilder).
B) an appreciation in the Dutch currency.
C) an increase in the supply of Dutch currency as foreign exchange.
D) a decrease in the supply of Dutch currency as foreign exchange.

Question

-Using the above figure, an increase in the demand for Dutch goods by U. S. consumers will lead to
A) a depreciation in the Dutch currency (i.e. the guilder). 
B) an appreciation in the Dutch currency. 
C) an increase in the supply of Dutch currency as foreign exchange. 
D) a decrease in the supply of Dutch currency as foreign exchange.

Quizplus · Accepted Answer

An increase in demand for Dutch goods by U.S. consumers will lead to an increase in demand for the Dutch currency (guilder) to pay for those goods, causing the guilder to appreciate.

-Using the Above Figure, an Increase in the Demand for Dutch