Question

using the model of demand and supply for u.s. dollars, what would you expect to happen to the u.s. dollar exchange rate if, in light of a worsening geopolitical situation, americans viewed foreign bonds as riskier than before?

Answer 1

The number of units of foreign currency stated per U.S. dollar will increase, representing a strengthening of the dollar, increasing the exchange rate.

Define foreign exchange rate.

The foreign exchange rate is the cost of the local currency relative to another currency. The purpose of international exchange is to compare various currencies to show how they are valued in relation to one another.

The price of one currency represented in terms of another currency is known as the foreign exchange rate, sometimes known as the rate of exchange between two currencies.

Exchange rates for a currency can be either fixed or floating. The floating exchange rate is determined by market forces, while the fixed exchange rate is regulated by the central bank of the country.

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