The Following Figure Shows the Equilibrium in the Foreign Exchange

question 119

Multiple Choice

The following figure shows the equilibrium in the foreign exchange market where dollars are exchanged for yuan.

-Refer to the figure above.If the yuan is allowed to float,at exchange rates above E yuan per dollar,________ the value of the dollar in the foreign exchange market.

• A) the excess demand for dollars in exchange for yuan increases
• B) the excess demand for dollars in exchange for yuan lowers
• C) the excess supply of dollars in exchange for yuan increases
• D) the excess supply of dollars in exchange for yuan lowers

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