With Everything Else the Same, in the Foreign Exchange Market

question 133

Multiple Choice

With everything else the same, in the foreign exchange market which of the following increases the supply of Australian dollars?
I. A fall in the Australian interest rate
II. A fall in interest rates in foreign countries
III. A rise in the expected future exchange rate

• A)I only
• B)I and II only
• C)I and III only
• D)I, II and III

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Definitions:

Interest-free

Financial arrangements or loans that do not require the borrower to pay any extra amount over the principal borrowed amount.

Financial Institution

An organization that provides financial services, such as banks, insurance companies, and investment firms.

Suppliers

Entities or individuals that provide goods or services to another business, often as part of a supply chain.