The supply of US dollars on the foreign exchange market slopes __________ because US consumers spend __________ on Canadian goods when the Canadian dollar price of the US dollar
_____________.
A) upward; less; increases
B) upward; more; increases
C) downward; less; falls
D) downward; more; falls

Question

Quizplus · Accepted Answer

The supply of US dollars on the foreign exchange market slopes upward because as the Canadian dollar price of the US dollar increases, US consumers spend more on Canadian goods, requiring them to exchange more US dollars for Canadian dollars, thus increasing the supply of US dollars on the foreign exchange market.

The Supply of US Dollars on the Foreign Exchange Market