Which of the following will generate a demand for country X's currency in the foreign exchange market?

Question

Quizplus · Accepted Answer

Foreigners who want to buy stocks and bonds of firms in country X will need to acquire the currency of country X first. This will create demand for country X's currency in the foreign exchange market. The other options do not necessarily generate demand for country X's currency. Travel by citizens of country X may involve exchanging currency, but it does not necessarily increase demand for country X's currency. Imports of country X may lead to an increase in the supply of country X's currency if payments are made in foreign currencies. Charitable donations do not relate to trade and therefore do not directly affect the foreign exchange market.

Which of the Following Will Generate a Demand for Country