Suppose That the U

question 491

Multiple Choice

Suppose that the U.S. exchange rate is expected to fall in the future. As a result, in the foreign exchange market, there will be

• A) an increase in the demand for dollars, a decrease in the supply of dollars, and a rise in the equilibrium exchange rate.
• B) a decrease in the demand for dollars, an increase in the supply of dollars, and a fall in the equilibrium exchange rate.
• C) an increase in the demand for dollars, a decrease in the supply of dollars, and a fall in the equilibrium exchange rate.
• D) a decrease in the demand for dollars, an increase in the supply of dollars, and a rise in the equilibrium exchange rate.

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Definitions:

Currency Transaction

A financial transaction that involves the exchange of one currency for another, either at a bank, exchange bureau, or as part of a larger financial transaction.

Historical Exchange Rate

The rate at which one currency was exchanged for another in the past, used for comparison or accounting purposes.

International Conversion Rate

The international conversion rate is the exchange rate at which one currency can be converted into another for international transactions.

Currency Rate

The value of one currency expressed in terms of another currency; also known as the exchange rate.