Refer to Figure 18.1.What would happen to the value of the U.S.dollar if there were a perception that the value of Thai assets would decrease?
A)The dollar would depreciate against the baht.
B)The dollar would appreciate against the baht.
C)The dollar would remain at the same value against the baht.
D)The dollar would appreciate depending on the elasticity of demand for bahts.
E)The dollar would depreciate depending on the elasticity of demand for bahts.

Question

Quizplus · Accepted Answer

If there is a perception that the value of Thai assets would decrease, investors would likely sell Thai assets and convert their holdings back to U.S. dollars, increasing the demand for dollars and causing the dollar to appreciate against the baht.