If the central banks of the world chose to diversify their foreign-exchange reserves away from the dollar and into the euro,
A)this would have the result of a strengthening of the value of the dollar.
B)this have the result of a weakening in the value of the dollar.
C)this would not have much impact, as the information would be lost in the day-to-day volatility of exchange rates.

Question

Quizplus · Accepted Answer

If the central banks of the world chose to diversify their foreign-exchange reserves away from the dollar and into the euro, this would increase the demand for euros and decrease the demand for dollars, leading to a weakening of the value of the dollar.

If the Central Banks of the World Chose to Diversify