If there is currently a surplus of dollars,which of the following would you expect to see in the foreign exchange market?
A)The dollar will appreciate.
B)The dollar will depreciate.
C)There will be a decrease in the demand for dollars.
D)There will be a decrease in the supply of dollars.

Question

Quizplus · Accepted Answer

When there is a surplus of dollars, the supply of dollars in the foreign exchange market is high compared to the demand for dollars. This creates downward pressure on the value of the dollar, resulting in its depreciation. Therefore, we would expect to see the dollar depreciate in the foreign exchange market.

If There Is Currently a Surplus of Dollars,which of the Following