If U.S. demand for imports increases it would be expected that the value of the dollar in international currency markets would tend to

Question

Quizplus · Accepted Answer

When the demand for imports increases, more dollars are used to purchase foreign currency to pay for those imports, which means there is a higher supply of dollars in international currency markets. According to the law of supply and demand, when supply increases, the value of the currency tends to decrease. Therefore, the value of the dollar would tend to decline in international currency markets.

If US Demand for Imports Increases It Would Be Expected That