Which of the following will shift the demand for the euro to the right?
A)an increase in interest rates in the European Union
B)an increase in incomes in countries that buy goods from the European Union
C)expectations among speculators that the price of the euro will rise in the future
D)All of the above will shift the demand for the euro to the right.

Question

Quizplus · Accepted Answer

An increase in interest rates in the European Union will make euro-denominated investments more attractive to investors, leading to an increase in demand for the euro. An increase in incomes in countries that buy goods from the European Union will increase their purchasing power, leading to an increase in demand for euro-denominated goods and services, and thus increasing demand for the euro. Expectations among speculators that the price of the euro will rise in the future will prompt them to buy euros now, leading to an increase in demand for the euro. Therefore, all of the choices mentioned will shift the demand for the euro to the right.

Which of the Following Will Shift the Demand for the Euro