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Figure: Exchange Rate Shifts
-(Figure: Exchange Rate Shifts)When demand for U.S.goods increases,the U.S.dollar will _____,and the equilibrium exchange rate will shift from _____ to _____.

Question

Use the following to answer questions 
Figure: Exchange Rate Shifts 
-(Figure: Exchange Rate Shifts)When demand for U.S.goods increases,the U.S.dollar will _____,and the equilibrium exchange rate will shift from _____ to _____.

Quizplus · Accepted Answer

When demand for U.S. goods increases, the U.S. dollar appreciates because more foreign currency is needed to buy U.S. goods, leading to a higher exchange rate, shifting from e₀ to e₁.

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