Which of the following would be expected to increase the demand for U.S. currency?
A) Competition among brokers forces down the commission charge for selling bonds or stocks.
B) The economy enters a recession.
C) Political instability increases dramatically in developing nations.
D) On-line banking allows customers to transfer funds between checking and stock mutual funds 24 hours a day.

Question

Quizplus · Accepted Answer

Political instability in developing nations may cause investors to switch to safe-haven currencies such as the U.S. dollar, increasing demand for it.

Note: None of the other choices are likely to have a significant impact on demand for U.S. currency. A decrease in broker commissions (A) or the availability of on-line banking services (D) may make it easier for investors to buy or sell securities, but this would not necessarily lead to an increase in demand for U.S. currency. A recession (B) may actually decrease demand for currency overall as people have less money to spend.

Which of the Following Would Be Expected to Increase the Demand