Question

If the supply of dollars in the market for foreign-currency exchange shifts left, then the a. rises and the quantity of dollars exchanged does not change. b. rises and the quantity of dollars exchanged falls. c. rises and the quantity of dollars exchanged rises. d. falls and the quantity of dollars exchanged does not change.

Answer 1

Answer:

b. rises and the quantity of dollars exchanged falls.

Explanation:

As provided that the curve shifts leftward that means the supply has decreased and that the price has fallen.

Accordingly people will tend to buy more dollars, but since the supply is less the exchange of dollars practically will fall because the supply has decreased and the supplier will not be ready to sell the same in low rates.

Accordingly the exchange rate of dollars will rise because of low supply.

Also the quantity will fall of actual exchange of dollars because the suppliers would not supply at low price in high demand.

Thus, option b is correct.