In the open-economy macroeconomic model, what does the quantity of dollars demanded in the foreign-currency exchange market depend on?
A)the real exchange rate and import quotas
B)the real exchange rate and government deficit
C)the real interest rate and import quotas
D)import quotas and government deficit

Question

Quizplus · Accepted Answer

The quantity of dollars demanded in the foreign-currency exchange market depends on the real exchange rate and import quotas because these factors influence the demand for U.S. goods and services by foreigners, which in turn affects the demand for dollars.

In the Open-Economy Macroeconomic Model, What Does the Quantity of Dollars