The demand for dollars will increase when
A) real interest rates in the United States fall.
B) U.S. labor productivity increases relative to the world.
C) the world is perceived as more stable than it used to be.
D) U.S. residents develop a taste for more imported products.

Question

Quizplus · Accepted Answer

When US labor productivity increases relative to the world, it means that there is an increased demand for US goods and services, leading to an increased demand for dollars to purchase those goods and services. This, in turn, increases the value of the dollar.

The Demand for Dollars Will Increase When