U.S. imports
A) increase the foreign demand for foreign currencies.
B) increase the domestic demand for foreign currencies.
C) decrease the foreign supply of foreign currencies.
D) increase the domestic supply of foreign currencies.

Question

Quizplus · Accepted Answer

When the US imports goods from a foreign country, it must pay in the currency of that country. This increases the demand for foreign currencies in the US, leading to more people exchanging US dollars for foreign currencies to make payments for the imported goods. Therefore, imports increase the domestic demand for foreign currencies.

U.S. Imports