Suppose That the Real Exchange Rate Is Such That the Market

question 180

Multiple Choice

Suppose that the real exchange rate is such that the market for foreign-currency exchange has a surplus

• A)this will lead to an appreciation of the dollar, an increase in U.S.net exports, and so an increase in the quantity of dollars demanded in the foreign exchange market.
• B)this will lead to an appreciation of the dollar, a decrease in U.S.net exports, and so a decrease in the quantity of dollars demanded in the foreign exchange market.
• C)this will lead to a depreciation of the dollar, an increase in U.S.net exports, and so an increase in the quantity of dollars demanded in the foreign exchange market.
• D)this will lead to a depreciation of the dollar, a decrease in U.S.net exports, and so a decrease in the quantity of dollars demanded in the foreign exchange market.

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