Use the Following to Answer Questions

question 68

Multiple Choice

Use the following to answer questions .
Exhibit: Foreign Exchange Market
-(Exhibit: Foreign Exchange Market) The demand for dollars curve slopes downwards because

• A) a higher exchange rate tends to make U.S. goods and services more expensive for foreigners, thereby generating a lower quantity of dollars in the foreign exchange market.
• B) a higher exchange rate tends to make U.S. goods and services cheaper for foreigners, thereby generating a lower quantity of dollars in the foreign exchange market.
• C) a lower exchange rate tends to decrease U.S. exports, which raises the price of foreign currency in the foreign exchange market.
• D) a lower exchange rate tends to increase U.S. imports, thereby raising the price of foreign currency in the foreign exchange market.