-Which of the following would best explain the increase in demand for dollars illustrated in the Figure ?
A)An increase in U.S. prices, ceteris paribus
B)A decrease in U.S. interest rates, ceteris paribus
C)An increase in foreign incomes, ceteris paribus
D)An increase in foreign interest rates, ceteris paribus

Question

-Which of the following would best explain the increase in demand for dollars illustrated in the Figure ?
A)An increase in U.S. prices, ceteris paribus 
B)A decrease in U.S. interest rates, ceteris paribus 
C)An increase in foreign incomes, ceteris paribus 
D)An increase in foreign interest rates, ceteris paribus

Quizplus · Accepted Answer

An increase in foreign incomes, ceteris paribus, would lead to a higher demand for dollars as foreigners with higher incomes would likely increase their purchases of U.S. goods, services, and investments, requiring them to convert their currency into dollars.

-Which of the Following Would Best Explain the Increase in Demand