If a dollar is more expensive in terms of a foreign currency than the equilibrium exchange rate, a ____ exists at the current exchange rate that will put ____ pressure on the exchange value of a dollar.

Question

Quizplus · Accepted Answer

u200bWhen a dollar is more expensive than the equilibrium exchange rate, it means that the demand for dollars is lower than the supply at that price, creating a surplus of dollars. This surplus puts downward pressure on the exchange value of a dollar to move towards equilibrium.

If a Dollar Is More Expensive in Terms of a Foreign