Every transaction concerning the exportation of goods from the United States constitutes a
A) supply of foreign currency with no effect on the market for the dollar.
B) demand for dollars with no effect on markets for foreign currencies.
C) supply of foreign currencies and a demand for dollars.
D) demand for foreign currencies and a supply of dollars.

Question

Quizplus · Accepted Answer

Every transaction involving the exportation of goods from the United States results in a supply of foreign currencies (as foreign buyers convert their currencies into dollars to pay for the goods) and a demand for dollars (as these dollars are needed to complete the transaction). This affects both the market for the dollar and the markets for foreign currencies.

Every Transaction Concerning the Exportation of Goods from the United