The figure above shows demand curves for dollars in the foreign exchange market.
-The demand curve shifts rightward from D₀ to D₁ when the U.S.interest rate ________ and foreign interest rates are unchanged. The demand curve shifts rightward from D₀ to D₁ when the expected future exchange rate ________.
A) rises; falls
B) falls; rises
C) rises; rises
D) falls; falls
E) None of the above answers are correct because the factors mentioned lead to movements along the demand curve and not to shifts of the demand curve.
Correct Answer:
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