If more European and Japanese firms want to build factories and expand their offshore investments in the United States,the supply of U.S.dollars on foreign exchange markets will increase as a result of this investment activity.

Question

Quizplus · Accepted Answer

When European and Japanese firms build factories or expand investments in the United States, they need to convert their currencies into U.S. dollars to make these investments. This increases the demand for U.S. dollars on foreign exchange markets, not the supply.

If More European and Japanese Firms Want to Build Factories