Identify Whether Each of the Following Would Lead to an Appreciation

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The Answer is
(a) This causes the supply of dollars to decrease in the foreign exchange markets and the value of the dollar to appreciate.
(b) An increase in the inflation rate in the United States relative to England causes the demand for dollars in the foreign exchange markets to decrease and the supply of dollars in the foreign exchange markets to increase. This leads to a depreciation of the dollar.
(c) An increase in the money supply leads to lower interest rates, which reduces the demand for dollars in the foreign exchange markets and increases the supply of dollars in the foreign exchange markets. This leads to a depreciation of the dollar.
(d) When income in the United States increases, the supply of dollars increases in the foreign exchange markets. This leads to a depreciation of the dollar.

Identify Whether Each of the Following Would Lead to an Appreciation

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