Consider a foreign exchange market diagram with dollars on the horizontal axis,the yen price of the dollar on the vertical axis,an upward-sloping supply curve and downward-sloping demand curve.At an exchange rate above the equilibrium rate there is an excess ________ dollars causing market pressure for ________ of the dollar.

Question

Quizplus · Accepted Answer

At an exchange rate above the equilibrium rate, there is an excess supply of dollars. This means that there are more dollars available in the market than are being demanded, leading to market pressure for depreciation of the dollar. Therefore, the correct choice is D - supply of, depreciation.

Consider a Foreign Exchange Market Diagram with Dollars on the Horizontal