An American firm that buys foreign exchange because its managers expect the dollar to depreciate is
A)increasing the supply of foreign exchange.
B)increasing the demand for foreign exchange.
C)speculating.
D)Both A and B.
E)Both B and C.

Question

Quizplus · Accepted Answer

The firm is increasing the demand for foreign exchange because it is buying it, and it is speculating because it is acting on the expectation that the dollar will depreciate.

An American Firm That Buys Foreign Exchange Because Its Managers