As the dollar exchange rate decreases,the quantity of dollars supplied in the foreign exchange market _________ and the quantity of dollars demanded in the foreign exchange market _________.

Question

Quizplus · Accepted Answer

As the dollar exchange rate decreases, meaning the value of the dollar falls, the quantity of dollars supplied in the foreign exchange market decreases because people are less willing to supply dollars in exchange for other currencies. At the same time, the quantity of dollars demanded in the foreign exchange market increases, because people will want to buy more dollars in order to take advantage of the lower exchange rate. Therefore, the correct answer is E: decreases; increases.

As the Dollar Exchange Rate Decreases,the Quantity of Dollars Supplied