If a dollar is more expensive in terms of a foreign currency than the equilibrium exchange rate,what will happen in the foreign exchange market?

Question

Quizplus · Accepted Answer

When the dollar is more expensive than the equilibrium exchange rate, it means the dollar is overvalued. This leads to a surplus of dollars as fewer people want to buy the expensive dollar, creating downward pressure on the exchange rate to return to equilibrium.

If a Dollar Is More Expensive in Terms of a Foreign