If foreign income rises then:
A) the supply of foreign exchange will increase.
B) the supply of foreign exchange will decrease.
C) the supply of foreign exchange will shift to the left.
D) the supply of foreign exchange will stay the same.
E) the exchange rate will not change.

Question

Quizplus · Accepted Answer

When foreign income rises, it typically leads to an increase in demand for domestic goods by foreigners. This results in more of the foreign currency being converted to the domestic currency, thereby increasing the supply of foreign exchange in the domestic market.

If Foreign Income Rises Then