Use the following to answer questions :
Exhibit: Policies Influence Real Exchange Rate A)

B)

C)

D)

-(Exhibit: Policies Influence Real Exchange Rate) Which of the panels illustrates the impact on the real exchange rate of an increase in investment demand?
A) (B) (
C) (
D) (

Question

Use the following to answer questions :
Exhibit: Policies Influence Real Exchange Rate A)

B)

C)

D)

-(Exhibit: Policies Influence Real Exchange Rate) Which of the panels illustrates the impact on the real exchange rate of an increase in investment demand?
A) (B) (
C) (
D) (

Quizplus · Accepted Answer

An increase in investment demand typically leads to an appreciation of the real exchange rate, as higher investment demand can increase the demand for domestic currency, making it stronger relative to foreign currencies.

Use the Following to Answer Questions