-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 rises.
B) foreign interest rates rise.
C) the expected future exchange rate falls.
D) the current exchange rate rises.

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 rises. 
B) foreign interest rates rise. 
C) the expected future exchange rate falls. 
D) the current exchange rate rises.

Quizplus · Accepted Answer

A rise in U.S. interest rates makes holding U.S. dollars more attractive, leading to an increase in the supply of U.S. dollars as investors seek to invest in U.S. assets.

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