Asked by Rachel Sawyer on Jul 03, 2024
Verified
If U.S.demand for imports increases it would be expected that the value of the dollar in international currency markets would tend to
A) increase.
B) change in a manner that cannot be determined without additional information concerning the direction of the shifts in the demand for and supply of dollars.
C) decline.
D) remain unchanged.
International Currency Markets
Global platforms for exchanging one country's currency for another's, influencing foreign exchange rates and international trade.
Demand for Imports
The desire and ability of a country to purchase goods and services from other countries.
- Acquire knowledge on the impact of supply and demand in setting freely floating exchange rates.
Verified Answer
JM
juan manuel echeverry muñozJul 05, 2024
Final Answer :
C
Explanation :
When the U.S. demand for imports increases, it requires more dollars to purchase the foreign goods, which leads to an increase in the supply of dollars in international currency markets. Therefore, the value of the dollar in international currency markets would be expected to decline.
Learning Objectives
- Acquire knowledge on the impact of supply and demand in setting freely floating exchange rates.