Question

Other things the same, if the expected return on U.S. assets increased (e.g. higher interest rate), the a. supply of dollars in the market for foreign-currency exchange shifts right. b. supply of dollars in the market for foreign-currency exchange shifts left. c. demand for dollars in the market for foreign-currency exchange does not shifts d. demand for dollars in the market for foreign-currency exchange shifts left.

Answer 1

Answer:

b. supply of dollars in the market for foreign-currency exchange shifts left

Explanation:

In the case when the expected return on the US assets should be rise while keeping other things constant so it reduced the dollar supply because the investors in US would begins switching the international investment to the domestic due to this it reduced the supply. This cause to shifting the supply curve to the left

Therefore the option b is correct