The figure above shows the market for foreign exchange in 2001 and 2009.
-Which of the following could have lead to the shifts illustrated in the figure above?
i. The U.S.exchange rate was expected to depreciate between 2001 and 2009.
ii. The U.S.exchange rate was expected to appreciate between 2001 and 2009.
iii. The U.S.interest rate rose relative to interest rates in other countries between 2001 and 2009.

Question

Quizplus · Accepted Answer

If the U.S. exchange rate was expected to depreciate, it would lead to an increase in demand for U.S. goods and services, causing a shift in the economic indicators illustrated.

The Figure Above Shows the Market for Foreign Exchange in 2001