Under a System of Flexible Exchange Rates, an Increase in Demand

question 140

Multiple Choice

Under a system of flexible exchange rates, an increase in demand for a nation's currency in the foreign exchange market will

• A) cause the nation's currency to appreciate.
• B) make it more expensive for the nation to import goods.
• C) cause the nation's balance on current account to shift toward a surplus.
• D) make it less expensive for foreigners to buy the nation's goods.