-In the figure above, the shift in the demand curve for U.S. dollars from D? to D? could occur when
A) the expected future exchange rate decreases.
B) the U.S. interest rate rises.
C) people expect that the dollar will depreciate.
D) foreign interest rates increase.

Question

-In the figure above, the shift in the demand curve for U.S. dollars from D? to D? could occur when
A) the expected future exchange rate decreases. 
B) the U.S. interest rate rises. 
C) people expect that the dollar will depreciate. 
D) foreign interest rates increase.

Quizplus · Accepted Answer

A shift in the demand curve for U.S. dollars from D1 to D2 could occur when the U.S. interest rate rises because higher interest rates in the U.S. would attract more foreign capital, increasing the demand for U.S. dollars as investors exchange their currency for dollars to invest in the U.S.

-In the Figure Above, the Shift in the Demand Curve