The Following Figure Depicts the Demand for Chinese Yuan in the Foreign

question 12

Multiple Choice

The following figure depicts the demand for Chinese yuan in the foreign currency exchange market. Use this figure to answer the following questions.
-If the interest rates in China fall relative to interest rates in the United States and,at the same time,U.S.consumer demand for Chinese goods decreases,the demand curve in the figure above

• A) will not shift because interest rates are not related to exchange rates.
• B) will not shift because interest rates only affect the supply curve.
• C) can either increase from D₁ to D₂ or decrease from D₁ to D_3.
• D) will increase from D₁ to D_2.
• E) will decrease from D₁ to D_3.

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