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Figure: Change in the Demand for U.S. Dollars
-(Figure: Change in the Demand for U.S. Dollars) Look at the figure Change in the Demand for U.S. Dollars. A movement from E₂ to E₁ in this foreign exchange market would cause Americans to purchase _____ goods and services from Europe.

Question

Use the following to answer questions :
Figure: Change in the Demand for U.S. Dollars

-(Figure: Change in the Demand for U.S. Dollars) Look at the figure Change in the Demand for U.S. Dollars. A movement from E₂ to E₁ in this foreign exchange market would cause Americans to purchase _____ goods and services from Europe.

Quizplus · Accepted Answer

A movement from E₂ to E₁ means that the demand for U.S. dollars has decreased. This would make the dollar weaker relative to the Euro. As a result, importing goods and services from Europe would become more expensive, causing Americans to purchase less from Europe. Thus, the answer is B) less.

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