If,at the current exchange rate between the dollar and the South African rand of 6.92 rand per dollar,the rand is "undervalued," how do you expect demand and supply in the foreign exchange markets to respond?
A)The demand for the dollar will fall,while the supply of the rand will rise.
B)The demand for the dollar will rise,while the supply of the rand will fall.
C)The supply of the dollar will rise,while the demand for the rand will rise.
D)The supply of the dollar will rise,while the demand for the rand will fall.

Question

Quizplus · Accepted Answer

If the rand is undervalued, it means that it is cheaper than it should be. Therefore, more people will want to buy the rand because it is a good deal, increasing the demand for the rand. At the same time, because the rand is undervalued, people will want to sell their dollars to get more rand for their money, increasing the supply of the dollar.

If,at the Current Exchange Rate Between the Dollar and the South