Which of the following statements about the foreign exchange market is correct?
A) The higher the expected future exchange rate, the smaller is the expected profit from holding dollars and so the smaller is the demand for dollars.
B) The higher the expected future exchange rate, the greater is the expected profit from holding dollars and so the greater is the demand for dollars.
C) The higher the expected future exchange rate, the smaller is the expected profit from holding dollars and so the greater is the demand for dollars.
D) The lower the expected future exchange rate, the smaller is the expected profit from holding dollars and so the greater is the demand for dollars.
E) The lower the expected future exchange rate, the greater is the expected profit from holding dollars and so the greater is the demand for dollars.
B
You might also like to view...
Which of the following best describes an externality?
A) something that is external to the economy B) a sales tax on a good in addition to the market price C) an effect of a transaction felt by someone other than the buyer or seller D) anything produced in other countries E) a change from what is normal
If the price elasticity of demand for peanut butter is 2.4, then peanut butter
A) has an elastic demand. B) has an inelastic demand. C) has a unit elastic demand. D) is a normal good.