Which of the following would tend to shift the supply of dollars in the market for foreign-currency exchange in the open-economy macroeconomic model to the right?
A)The exchange rate rises.
B)The exchange rate falls.
C)The expected rate of return on U.S. assets rises.
D)The expected rate of return on U.S. assets falls.

Question

Quizplus · Accepted Answer

When the expected rate of return on U.S. assets falls, investors are less inclined to hold U.S. assets, leading to an increase in the supply of dollars as they exchange them for foreign currencies to invest elsewhere.

Which of the Following Would Tend to Shift the Supply