-In the Figure Above, the Shift in the Demand Curve

question 109

Multiple Choice

-In the figure above, the shift in the demand curve for U.S. dollars from D₀ to D₁ could occur when

• A) the U.S. interest rate drops.
• B) the expected future exchange rate falls.
• C) foreign interest rates drop.
• D) people expect that the dollar will depreciate.

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Definitions:

Face Value

The nominal value printed on a bond or security, representing the amount due at maturity.

Stated Interest Rate

The annual interest rate declared on a financial instrument, such as a loan or bond, not necessarily reflecting fees or compounding.

Market Rate

The prevailing interest rate available in the marketplace on investments, loans, and deposits, determined by supply and demand factors.

Discount on Bonds Payable

The amount by which a bond's selling price is less than its face value.