An excess demand of the dollar in exchange for yen will cause:
A)no change in the exchange rate of the yen to the dollar.
B)the dollar to depreciate relative to the yen.
C)the yen to depreciate against all major currencies.
D)the dollar to appreciate relative to the yen.

Question

Quizplus · Accepted Answer

When there is an excess demand for a currency, its value will typically increase relative to the other currency in the exchange rate. Therefore, the dollar will appreciate relative to the yen.

An Excess Demand of the Dollar in Exchange for Yen