Which of the following statements regarding the market for foreign currency exchange is true? An increase in SA net exports
A)decreases the supply of rands and the rand depreciates.
B)increases the demand for rands and the rand appreciates.
C)increases the supply of rands and the rand depreciates.
D)decreases the demand for rands and the rand appreciates.

Question

Quizplus · Accepted Answer

An increase in South African net exports would cause an increase in demand for rands by foreign buyers, which would appreciate the rand. Therefore, Option B is the correct answer. Option A is incorrect because it assumes a decrease in supply of rands, which is not necessarily true. Option C is incorrect because an increase in supply of rands would lead to a depreciation of the rand, which is the opposite of what is expected. Option D is incorrect because it assumes a decrease in demand for rands, which is not true in this scenario.

Which of the Following Statements Regarding the Market for Foreign