-Using the above figure, an increase in the demand for Dutch goods by U. S. consumers will lead to
A) a depreciation in the Dutch currency.
B) an appreciation in the Dutch currency.
C) an increase in the supply of Dutch currency as foreign exchange.
D) a decrease in the supply of Dutch currency as foreign exchange.

Question

-Using the above figure, an increase in the demand for Dutch goods by U. S. consumers will lead to
A) a depreciation in the Dutch currency. 
B) an appreciation in the Dutch currency. 
C) an increase in the supply of Dutch currency as foreign exchange. 
D) a decrease in the supply of Dutch currency as foreign exchange.

Quizplus · Accepted Answer

An increase in demand for Dutch goods by U.S. consumers will lead to an appreciation of the Dutch currency because U.S. consumers will need to exchange more U.S. dollars for Dutch currency to purchase these goods, increasing the demand for the Dutch currency.

-Using the Above Figure, an Increase in the Demand for Dutch