An increase in European wealth, all other factors held constant should:
A) have no impact at all on the demand for dollars.
B) cause the demand for dollars to decrease.
C) cause the demand for dollars to increase.
D) cause the supply of dollars to increase while the demand stays constant.

Question

Quizplus · Accepted Answer

An increase in European wealth, assuming all other factors are constant, would likely lead to an increase in the demand for dollars. This is because wealthier Europeans may buy more American goods, invest more in the United States, or travel more to the U.S., all of which would require converting their currency into dollars, thus increasing the demand for dollars.

An Increase in European Wealth, All Other Factors Held Constant