As the Expected Future Exchange Rate for Dollars Increases

question 39

Multiple Choice

As the expected future exchange rate for dollars increases

• A) the demand for U.S. dollars increases.
• B) the supply of U.S. dollars decreases.
• C) both the demand for U.S. dollars and the supply of U.S. dollars increase
• D) Both answers A and B are correct.

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Definitions:

Quantity Consumers

Refers to the number of individual buyers or units purchased in the market.

Income Effect

Refers to the change in the quantity of a product demanded by consumers due to a change in their income.

Price Sensitivity

The degree to which the price of a product or service affects consumers' purchasing behaviors or demand for that product or service.

Elastic

Describes a situation in economics where the demand or supply for a product changes significantly when its price changes.