Assuming actors have not yet had time to change their expectations about the future exchange rate, when the exchange rate ncreases, why is the supply curve of dollars in the foreign exchange market upward sloping? O Foreign goods and services are less expensive to import. O U.S. firms profit more by selling their goods and services domestically rather than selling to foreigners. O The expected profitability of purchasing a dollar today to sell in the future rises. U.S. goods are less expensive for foreigners to purchase.
Assuming actors have not yet had time to change their expectations about the future exchange rate, when the exchange rate ncreases, why is the supply curve of dollars in the foreign exchange market upward sloping? O Foreign goods and services are less expensive to import. O U.S. firms profit more by selling their goods and services domestically rather than selling to foreigners. O The expected profitability of purchasing a dollar today to sell in the future rises. U.S. goods are less expensive for foreigners to purchase.
Macroeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506756
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter19: International Finance And The Foreign Exchange Market
Section: Chapter Questions
Problem 14CQ
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Transcribed Image Text:In the foreign exchange market, the supply curve for the dollar is upward sloping. That is, when the exchange rate (foreign
currency per dollar) increases, the quantity of dollars supplied increases.
Assuming actors have not yet had time to change their expectations about the future exchange rate, when the exchange rate
increases, why is the supply curve of dollars in the foreign exchange market upward sloping?
Foreign goods and services are less expensive to import.
U.S. firms profit more by selling their goods and services domestically rather than selling to foreigners.
The expected profitability of purchasing a dollar today to sell in the future rises.
U.S. goods are less expensive for foreigners to purchase.
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