Assume that there is an increased demand in the United States for European wines. If all other factors are held constant, this change will result in
A) an increase in the exchange rate for euros.
B) an appreciation of the dollar.
C) a movement along the demand curve for euros.
D) a decrease in the value of the euro.

Question

Quizplus · Accepted Answer

An increased demand for European wines means more euros are needed to purchase these wines, leading to an increase in the demand for euros and thus an increase in the exchange rate for euros.

Assume That There Is an Increased Demand in the United