An expected appreciation of the dollar, everything else held constant, should cause:
A) the supply of dollars to increase.
B) the demand for dollars to increase.
C) the demand for dollars to decrease.
D) the dollar to depreciate now relative to other currencies.

Question

Quizplus · Accepted Answer

An expected appreciation of the dollar would lead to an increase in the demand for dollars, as investors and traders would want to buy more dollars in order to benefit from the expected increase in value. This would lead to an increase in the price of the dollar relative to other currencies, which is equivalent to a depreciation of those other currencies relative to the dollar.

An Expected Appreciation of the Dollar, Everything Else Held Constant