The Figure Above Shows Supply Curves of Dollars in the Foreign

question 210

Multiple Choice

The figure above shows supply curves of dollars in the foreign exchange market.
-The supply curve shifts rightward from S₀ to S₂ when the U.S.interest rate ________ and foreign interest rates are unchanged. The supply curve shifts rightward from S₀ to S₂ when the expected future exchange rate ________.

• A) rises; rises
• B) rises; falls
• C) falls; rises
• D) falls; falls
• E) None of the above answers are correct because the factors mentioned lead to movements along the demand curve and not to shifts of the demand curve.

---

Definitions:

Capital Lease Obligation

A lease classified as a financial transaction where the lessee essentially buys an asset and borrows the funds through a lease.

Periodic Cash Payments

Regular financial payments made over a stipulated period, such as dividends or loan repayments.

Depreciation Expense

Methodically spreading out the expense of a physical asset across its period of usability.

Capital Lease

A lease classified as a purchase by the lessee, whereby the lessee records the leased asset as an owned asset on the balance sheet.