The following figure depicts the demand for Chinese yuan in the foreign currency exchange market. Use this figure to answer the questions that follow.
-If the interest rates in China fall relative to interest rates in the United States and,at the same time,U.S.consumer demand for Chinese goods decreases,the demand curve in the figure above:
A) will not shift because interests rates are not related to exchange rates.
B) will not shift because interests rates only affect the supply curve.
C) can either increase from D₁ to D₂ or decrease from D₁ to D₃.
D) will increase from D₁ to D₂.
E) will decrease from D₁ to D₃.
Correct Answer:
Verified
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