In the market for euros, a decrease in the relative safety of U.S. investments tends to

Question

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When the relative safety of U.S. investments decreases, investors are more likely to seek alternatives, including investing in assets denominated in euros. This increases the demand for euros as investors sell their U.S. assets and buy European ones, leading to an increase in the equilibrium price of euros relative to the U.S. dollar.

In the Market for Euros, a Decrease in the Relative