In foreign exchange markets, the demand for dollars is determined:

Question

Quizplus · Accepted Answer

The demand for dollars in foreign exchange markets is determined by the level of U.S. exports and the demand for U.S. assets by foreigners. This is because foreigners need dollars to purchase U.S. goods and services, and also to invest in U.S. assets such as stocks, bonds or property. Therefore, the demand for dollars is closely tied to the level of U.S. economic activity and attractiveness of U.S. investments.

In Foreign Exchange Markets, the Demand for Dollars Is Determined