Which of the following best describes a graph that shows the supply and demand for foreign exchange?

Question

Quizplus · Accepted Answer

A graph that shows the supply and demand for foreign exchange would typically have the quantity of foreign exchange on the horizontal axis and the price of foreign exchange in terms of the domestic currency on the vertical axis. This is because the price of foreign exchange represents the quantity of domestic currency that must be given up to obtain a certain quantity of foreign exchange. Therefore, the demand for foreign exchange is negatively related to its price in terms of the domestic currency, while the supply of foreign exchange is positively related to its price. This relationship is best captured with a graph that has price on the vertical axis and quantity on the horizontal axis.

Which of the Following Best Describes a Graph That Shows