-In the figure above, the shift in the supply curve for U.S. dollars from S? to S? could occur when
A) the U.S. interest rate falls.
B) foreign interest rates fall.
C) the expected future exchange rate falls.
D) the current exchange rate falls.

Question

-In the figure above, the shift in the supply curve for U.S. dollars from S? to S? could occur when
A) the U.S. interest rate falls. 
B) foreign interest rates fall. 
C) the expected future exchange rate falls. 
D) the current exchange rate falls.

Quizplus · Accepted Answer

When foreign interest rates fall, investors find U.S. assets more attractive, increasing the supply of dollars as they exchange foreign currency for dollars to invest in the U.S., shifting the supply curve from S? to S?.

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