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

Quizplus · Accepted Answer

When foreign interest rates rise, it becomes more attractive for investors to hold foreign currencies, leading to an increase in the supply of U.S. dollars as investors exchange dollars for foreign currencies.

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