An increase in foreign real incomes may be graphically represented as a
A)slide upward on the demand curve for dollars in the foreign exchange market.
B)slide upward or downward on the demand curve for dollars in the foreign exchange market.
C)shift upward of the demand curve for dollars in the foreign exchange market.
D)rightward shift of the demand curve for dollars in the foreign exchange market.

Question

Quizplus · Accepted Answer

An increase in foreign real incomes will lead to an increase in demand for US goods and services, which will in turn lead to an increase in demand for dollars in order to purchase those goods and services. This increase in demand will cause the demand curve for dollars to shift rightward, as represented by choice D.

An Increase in Foreign Real Incomes May Be Graphically Represented