If U.S. assets are seen as having greater risk relative to foreign assets in the market for foreign exchange, this should cause the:
A) demand for dollars to increase.
B) supply of dollars to decrease.
C) supply of dollars to increase.
D) dollar to appreciate.

Question

Quizplus · Accepted Answer

When U.S. assets are perceived as riskier, investors are more likely to sell those assets and buy foreign assets, increasing the supply of dollars as they exchange them for foreign currency.

If US Assets Are Seen as Having Greater Risk Relative to to Foreign